The Main Mistakes New Prop Traders Make (and How to Avoid Them)

10.07.2025

Education

There are thousands of definitions. Each highlights its own facet of what constitutes a mistake. A lesson. A chance. A discovery. All of this is true. But for a prop trader, mistakes are something else.

If a stop loss was triggered by an unexpected tweet from Donald Trump. Or a prop trader simply took a loss. Even though he did everything right. From a formal point of view, these are mistakes. But experienced traders will say that this is absolutely not the case.

What then is a mistake? In trading, there is only one real mistake possible. It is a deviation from the trading system. In a sense, in the rest of life, there is only one mistake. A deviation from your principles. Everything else is lessons, chances, and discoveries.

There is one more nuance, though. Discoveries in trading should be written down. Tested against history. And if they have shown high predictive value or somehow save money, include them in the trading system. This will allow you to move up more steadily.

With this approach, everything will fall into place. A prop trader should be horrified by real mistakes. And be interested in learning new lessons. Then all his work will come down to strictly following the trading system. And periodically improving it.

A real mistake

If everything is so simple, why do many traders still make mistakes? The answer is simple. But it is difficult to accept. Usually you need to try everything on yourself to believe in its truthfulness.

Newbies miss the fact that the nervous system is intensively exploited in trading. It has a limited supply of energy. Sleep cannot fully restore it. Only a long break will help.

When a prop trader trades continuously for more than 3 weeks, nervous energy runs out. Self-control weakens. If you do not know about this effect, strange behavior begins. It is like oxygen starvation at altitude.

In the case of several unprofitable transactions, the trader convinces himself that the market now owes him. And if in the next transaction he doubles or triples the volume, he will definitely get back "his" money. And also make money.

This is the most dangerous situation. The trader is already trapped. If the transaction is unprofitable, he is unlikely to put up with a triple loss. And if he gets a triple profit, he will form a conviction that this is possible. The time bomb will still go off. Only later.

The only correct solution in a situation of nervous discharge and a series of losses is a long break. For a week or so. As soon as the nervous system recovers, trading problems will miraculously disappear. Everything will become transparent and understandable again.

Just lessons

A prop trader is obliged to do his homework. When he encounters new situations. Finds promising patterns. Everything is subject to analysis. Verification. And, if necessary, inclusion in the trading system. There is only one principle here. Take only the most valuable. Do not complicate things unnecessarily.

It is better to act proactively with lessons. Analyze not only your transactions. But also look closely at the experience of others. Especially sad. This will help you quickly understand what you should not do. As a rule, the hit parade looks the same:

open and close positions only according to the trading system,
observe risk management,
do not overtrade.

We have already discussed all this in the section "Real Mistake". But what is missing there are directions for finding improvements:

the trading system can fail on certain days of the week. For example, on Mondays, when market volatility is restrained. Or, on the contrary, torn due to weekend events.
Also, the alpha day can have a negative impact. Each week has a main event. At the time of its release, not all trading systems are positive.
The seasonal factor is very important. In autumn and spring, the markets are trending. Rebounds work much worse. And in winter and summer, everything is the opposite. The markets are standing. And catching impulses during these periods is less profitable.
Standard ratios of stop-loss and take-profit should also be approached critically. In the long run, trading patterns with a profit-loss ratio of 1 to 1 can provide a plus.

Organizational assistants

It is impossible to do all this without records. Traders keep several journals at the same time. One for analyzing yesterday's transactions. And writing down a trading plan for today. Another for research.

Journals calm, systematize and act as an additional indicator of "oxygen sufficiency." If it becomes difficult to keep them, nervous energy is about to run out. It's time to rest.

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