The ‘90% rule’ is a widely recognised assumption that only 90% of traders fail within their first 90 days, leaving only a small percentage who make it through the brutal prop trading learning curve.
But what makes prop trading so challenging? More importantly, how can you be part of the 10% who actually succeed? In this guide, we’ll break down what the 90% rule in trading means, why so many traders struggle, and what you can do to improve your odds.
What is the 90% Rule in Prop Trading?
The 90% rule in prop trading suggests that 90% of traders blow their accounts within the first 90 days. While the exact percentages may vary, the core idea remains the same: most traders fail, and they fail relatively quickly.
The main reasons behind this failure rate include:
- Lack of risk management: Overleveraging and ignoring stop losses.
- Emotional trading: Letting fear and greed dictate decisions.
- No clear strategy: Jumping from one approach to another without mastering one strategy.
- Unrealistic expectations: Expecting to make a fortune overnight.
Prop firms operate with strict drawdown limits, meaning one bad streak can end your funded account.
If you don’t have a plan to manage risk and control emotions, you’ll quickly become part of the 90% statistic.
Why Do Most Prop Traders Fail?
Understanding why most traders fail is the first step toward avoiding their mistakes. Here are some of the biggest reasons prop traders struggle:
1. Poor Risk Management
Prop firms typically have strict risk limits. If you hit a certain drawdown level, your account is gone.
Yet, many traders risk too much per trade, ignoring position sizing and stop-loss strategies.
Instead of managing risk like a professional, they go all-in, hoping for a quick win—only to wipe out their account.
To avoid this mistake, 1-2% risk per trade and maintain proper stop-loss placement.
2. Emotional Trading
Fear, greed, and revenge trading destroy more accounts than bad strategies.
After a loss, traders either hesitate to enter a new trade (fear) or try to win back money quickly (revenge trading).
Instead, use a trading plan and follow it with discipline. Take breaks if emotions start affecting your decisions.
3. No Clear Trading Strategy
Jumping from one strategy to another is a recipe for disaster. Many traders fail to master one proven system before trying something new. Instead, they chase the latest "secret strategy" they saw on social media.
Pick a strategy, test it, and stick to it. Track your results and refine over time.
4. Lack of Patience
Prop trading isn’t a get-rich-quick scheme. Many traders rush the process, expecting to pass challenges instantly or make a full-time income in their first month. When reality hits, they either overtrade or quit.
Accept that trading success takes months, even years. Focus on consistency over fast profits.
How to Beat the 90% Rule and Succeed in Prop Trading
If 90% of traders fail, that means 10% succeed. So, what separates them from the rest? Here’s how to beat the odds and succeed in prop trading.
1. Master Risk Management
If you take only one thing from this article, let it be this: protect your capital at all costs.
Even the best traders have losing streaks, but they manage to keep their accounts open because they control risk.
- Use a 1-2% max risk per trade
- Set stop-losses and respect them
- Follow a risk-to-reward ratio of at least 1:2
- Avoid revenge trading after a loss
2. Trade With a Plan
A trading plan is your roadmap. It tells you when to enter, when to exit, and how much to risk. Without one, you’re just gambling.
- Your plan should include:
- Your preferred strategy (e.g., scalping, swing trading, trend following)
- Entry and exit rules
- Risk management rules
- Maximum daily loss limits
Write your plan down and keep it insight throughout your trading session. This will encourage you to stick to it.
3. Control Your Emotions
Fear and greed lead to impulsive trades, which lead to losses. The best traders have emotional control.
Before you start prop trading, take some time to learn about trading psychology. Understanding how trading affects your emotions and the signs to look out for can help you avoid common pitfalls.
4. Focus on Consistency, Not Quick Profits
Most traders fail because they chase big wins instead of focusing on steady, consistent growth.
Passing a prop trading challenge isn’t about hitting winning streaks. It’s about following the plan every single day.
Set realistic goals like:
- Winning 55% of trades with a 1:2 risk-reward ratio
- Avoiding overtrading and only taking high-quality setups
- Sticking to daily and weekly loss limits
The 90% rule in prop trading isn’t a myth. It’s a harsh reality. However, you don’t have to be part of the 90%.
By focusing on risk management, emotional control, and a structured trading plan, you can improve your chances of success.
The traders who survive aren’t necessarily the smartest or the luckiest. They’re the ones who stay disciplined, stick to their strategy, and respect risk.
