Proprietary trading or prop trading is a very profitable trading industry. It helps traders to grow their careers and earn more profit even without having a large amount of capital. Now traders also dont need to face any personal financial risk and they can scale their capital more quickly. But most of the traders lose their funding accounts even without getting a chance to see real success. Why? Because they keep making the same avoidable mistakes over and over again. If you are also making some mistakes then it is important to understand these mistakes that you need to avoid so you can make your trading journey more successful. Let’s see the most common mistakes and more importantly how to avoid them.
Common Mistakes of Swing Traders
Ignoring the Firm’s Rules and Risk Parameters
You’d be surprised how many traders don’t even bother reading the fine print. Prop firms have strict risk limits for the reason that they don’t want traders taking wild bets that could wipe out the firm’s capital. Yet, so many traders break the rules whether it’s exceeding max drawdown, overleveraging, or not sticking to daily loss limits. Here the best solution is to treat the firm’s risk rules as your first priority. Know them inside and out and structure your trades around them. If your max daily loss is $2,500 then don’t put yourself in a position where a single bad trade wipes you out. Be disciplined.
Overleveraging and Taking on Too Much Risk
Leverage is a double-edged component of trading. It’s great when things are going well but it can destroy you when the market moves against you. Many traders get too aggressive and think they need to maximize every trade’s potential. The problem? A few bad trades and they’re done. You need to think long-term. Don’t take positions so big that a minor pullback shakes you out. Risk 1-2% per trade at most. A steady and compounding approach will keep you in the game longer.
Chasing Trades Instead of Waiting for Setups
FOMO (fear of missing out) is real. You see a stock breaking out and you don’t want to miss the move. So, you jump in late and right at the top. Now you’re stuck in a bad position with terrible risk-to-reward. So try to stick to your plan. Have predefined setups and wait for them. If you miss a move so what? The market will always give you another opportunity. Chasing leads to overtrading and overtrading leads to unnecessary losses.
Holding Losers Too Long
No one likes admitting they’re wrong. But in trading, holding onto a losing position and hoping it’ll turn around is a one-way ticket to blowing up. Prop firms don’t care about your ego but they care about risk management. Set stop losses and stick to them. Accept losses as part of the game. If a trade isn’t working then cut it and move on. The best traders are those who know when to take a small loss and keep trading.
Taking Profits Too Early
Many traders hold onto losers too long but they also take profits too soon. The second they see a little green they close the trade, only to watch it run another 10-20% without them. Have a plan for exits just like you do for entries. Use trailing stops or partial profit-taking strategies to lock in gains while still giving the trade room to run.
Ignoring Market Conditions
What works in a trending market won’t work in a sideways market. Yet, some traders stubbornly stick to the same strategy, no matter what the market is doing. Here you need to adapt and pay attention to market structure. If volatility is low then maybe it’s time to sit on the sidelines. If conditions are ideal then scale up. But never trade the same way in every market condition.
Not Having a Solid Trading Plan
Swing trading without a plan is like driving without a GPS. You might get lucky once in a while but eventually, you’ll get lost. Many traders wing it and enter trades on impulse rather than a well-defined system. You need to have a structured trading plan. Define your setups, entry/exit rules, risk per trade, and max drawdown. If you can’t write down your strategy in a few sentences then you don’t have one.
Letting Emotions Control Your Decisions
Fear, greed, hope, and frustration—these emotions will ruin your trading if you let them. Traders revenge trade after a loss, get greedy when they’re up, or hesitate to enter trades due to fear. Try to stick to your system no matter how you feel. If emotions start taking over then step away from the screen. The market will be there tomorrow.
9. Overtrading
More trades don’t mean more profits. In fact, overtrading often leads to unnecessary losses. Some traders feel the need to be in a trade at all times, even when there’s no valid setup.
Solution: Quality over quantity. Be patient. Take only high-probability setups and avoid forcing trades just to be active.
10. Not Reviewing Past Trades
If you don’t learn from your mistakes, you’ll keep making them. Many traders take trade after trade without ever reviewing what’s working and what’s not.
Solution: Keep a trading journal. Track every trade—why you took it, the outcome, and what you could’ve done better. Review your trades weekly and look for patterns in your mistakes.
Final Thoughts
Swing trading in a prop firm isn’t easy, but it’s 100% possible if you avoid these common mistakes. The traders who survive and thrive are the ones who treat it like a business, not a gambling spree. Stick to the firm’s rules, manage risk like a pro, stay patient, and constantly refine your strategy. Do that, and you’ll have a real shot at success.