Professional Trader's Guide: Prop Firm Industry & Fair Gap Strategy Inversion
Master proprietary trading with funded accounts and learn the powerful Fair Gap Inversion strategy to maximize your profit potential while trading with other people's capital.
Introduction to Prop Trading Firms
Funded Accounts
Trade with the firm's capital instead of risking your own money.
Profit Splits
Keep 70%-90% of profits while trading institutional funds.
Evaluation Process
Pass a trading challenge to prove your skills before accessing funded accounts.
Risk Controls
Follow strict drawdown limits and trading rules to maintain your account.
How Prop Firms Operate
Evaluation Fees
One-time or monthly charges for account access
Profit Sharing
Taking 10%-30% of profits generated
Trader Losses
Some firms profit from unsuccessful traders
Hedging
Protecting against losing traders through market hedges
Types of Proprietary Trading Firms
Challenges Faced by New Traders
Overtrading
Taking too many positions and breaking firm rules can quickly lead to account failure.
Poor Risk Management
Not using stop losses or risking too much per trade is a common path to blowing accounts.
Emotional Trading
Revenge trading after losses often compounds problems and accelerates account drawdowns.
Ignoring Firm Rules
Violating drawdown limits and other guidelines will get your account terminated.
Understanding Fair Value Gaps (FVG)
Identify the Gap Formation
Look for 3 candles: a large directional move, small retracement, then another strong candle in the original direction. The gap between wicks is your FVG zone.
Wait for Price Return
Instead of trading the initial breakout, practice strategy inversion by waiting for price to return and fill the gap.
Confirm Entry Signal
Enter on confirmation like a rejection candle or order block forming at the gap zone.
Set Precise Risk Parameters
Place stop loss below/above the gap and take profit at the next liquidity zone.
Trading Fair Gap Inversion Successfully
Identify FVG on 15M/1H Charts
Look for the characteristic 3-candle pattern creating a price gap.
Wait for Retracement
Be patient as price returns to the gap zone.
Confirm Entry
Enter on bullish/bearish reversal candle + RSI support.
Manage Risk
Set stop loss below/above gap with take profit at previous high/low or 1.5x risk.
Risk Management & Psychology in Prop Trading
Trading Psychology
Treat trading as a business, not gambling
Performance Tracking
Adjust strategies based on data
Avoid Revenge Trading
Stick to your trading plan
Use Stop Losses
No exceptions, ever
Risk 1-2% Per Trade
Follow prop firm drawdown rules
Top Prop Firms to Consider
90%
FTMO
Evaluation-based model with up to 90% profit split and best industry reputation
100%
The5ers
Growth plan offering up to 100% profit split with scaling account over time
90%
SurgeTrader
One-step challenge with 75%-90% profit split and simple evaluation process
90%
FXIFY
Flexible challenges with 80%-90% profit split across multiple account types
Final Tips for New Traders
Master One Strategy
Focus on Fair Gap Inversion before adding other techniques to your arsenal.
Journal & Backtest
Document all trades and test your strategy on historical data to improve consistency.
Start Small
Begin with smaller funded accounts before advancing to larger capital allocations.