5 Common Mistakes That Cause Funded Traders to Fail (And How to Avoid Them)

Getting a funded trading account is a big achievement, but keeping it alive is another story. Many Traders work very hard to pass a prop firm challenge, only to lose the account within weeks.

Here, we’ll cover the five most common mistakes that lead to failure for funded traders, along with practical strategies to avoid. Whether you’re with FTMO, The5ers, E8, or another proprietary trading firm, these tips can help you protect your capital, grow your profits, and enjoy a stable career as a funded trader.

Mistake #1 – Ignoring the Prop Firm Rules

One of the fastest ways to lose a funded account is by breaking rules! —sometimes without realizing it. Every prop firm has unique guidelines on:

• Daily drawdown limits

• Overall drawdown limits

• Trade duration requirements

• News trading restrictions

• Withdrawal procedures

How to Avoid: Before you even place your first trade, study the funded account rules in detail. Keep them printed or pinned to your desk, and double-check before placing a trade. This is especially important for firms with strict daily drawdown rule enforcement.

Mistake #2 – Poor Risk Management

Even profitable strategies can fail with bad risk management. Many traders over-leverage to hit profit targets quickly, which often leads to hitting the overall drawdown limit.

How to Avoid:

• Plan your risk management strategy

• Use stop-loss orders on every position

• Avoid revenge trading

Good risk management is the backbone of successful funded traders.

Mistake #3 – Overtrading After a Win or Loss

Trading too much—whether from excitement after a win or frustration after a loss—is a recipe for disaster. Prop trading evaluations and live funded accounts reward discipline, not volume.

How to Avoid: Create a daily trading plan and stick to it. Once you’ve hit your daily goal (profit or loss), walk away. Consistency wins more funded account payouts than chasing big wins.

Mistake #4 – Ignoring Trading Psychology

Emotions can wreck even the most well-tested strategy. Fear, greed, and frustration often cause traders to deviate from their plan.

How to Avoid It:

• Journal your trades daily to spot emotional patterns

• Take regular breaks away from screens

• Practice mindfulness or meditation before trading

Strong trading psychology is what separates long-term funded traders from those who burn out.

Mistake #5 – Choosing the Wrong Prop Firm

Not all prop firms are created equal. Some have strict rules, slow payouts, or platforms unsuitable for your trading style. For example, scalpers need low spreads and no minimum hold times, while swing traders may prioritize no time limits.

How to Avoid It: Research a prop firm comparison before joining. Read reviews, test their platforms, and ensure they support your preferred style—whether scalping, swing, or algo trading.

Celebrating Your Funded Success

Avoiding these mistakes can help you stay funded for years, enjoying steady funded 

account payouts and growth through scaling plans.

When you hit a major milestone like passing your first challenge or doubling your account, celebrate it! At Funded Award, we custom-frame your prop firm certificate so you can proudly display your achievement. Whether you’re an FTMO funded trader, MFF funded trader, or with another top firm, your success deserves to be seen.

Conclusion: From Funded to Flourishing

Being a funded trader isn’t just about passing the challenge—it’s about keeping your account and thriving in the long term. By following the right risk management, respecting the rules, and keeping your emotions in check, you can avoid the traps that cause many feeling trades.

Trade smart, stay disciplined, and frame your success.