Learn about the Consistency Rule in funded account challenge

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The Consistency Rule in a Funded account challenge

Overview

Trading and investing in the global financial markets are increasingly popular, especially in the new post-Covid reality. Retail investors brush shoulders with professional money managers as Wall Street expands and moves to the cloud. In other words, the game of high finance is no longer reserved for the upper echelon of investors. Instead, people like you are taking the lead right next to big-shot market wizards.

Table Of Contents

With all this said, it’s worth noting that there are always opportunities in asset classes and if you set your trading plan straight, you can spot them and ride them into profits. And what’s the best way to achieve lasting success? The one-word answer is consistency. Consistency is what has led the best investors to a windfall of profits over time. Consistency has been the guiding principle of hedge fund billionaires like Ray Dalio, George Soros, Paul Tudor Jones, and many more. This is why we established in our Funded Account Challenge a rule on consistency.

It’s designed to help you become a better, consistent trader that is careful when placing bets and careful when exiting bets. Let’s take a trip into this rule and see how it works and how you can master it.

What is the Consistency rule?

The Consistency rule in the OspreyFX Funded Account Challenge is a key requirement for successfully finishing the evaluation process. The Consistency rule states that no single trading day should make up 30% or more of the total profit over the course of the challenge. Let’s break it down to make this easy to understand. Trading is a long-term game that requires patience, emotion control, risk management, and steady results. As you set out to trade, one of the biggest obstacles, especially for beginners, is the desire to make a quick buck. But that urge has more potential to cause trouble since it’s based on luck than to help you learn how to be consistently profitable.

Instead of relying on luck and single-day breakthroughs, aim to stay consistent in your trading results and you will enjoy better returns produced from a reliable trading strategy. The Consistency rule, in this regard, will be carrying your experience to success as you learn how to control your trading in a way that will help you grow as a trader.

How does the Consistency rule work?

How does the Consistency rule work in a funded account challenge

So how does the Consistency rule work? Let’s revisit: the Consistency rule states that your total profit in the duration of the challenge should not have a single day with a concentration of 30% or more. In other words, your profits should be spread relatively equally where no single day accounts for 30% or more of the total profit.

Now, let’s see an example. We’ll use $10,000 to illustrate. The goal of the challenge is to have at least a 10% gain, or $1,000, in 30 days. What this means is that no single daily profit should exceed 30%, or $300. In other words, maintain a consistent lineup of profits that will not be greater than $300 in one day and you will pass the challenge.

What happens if you overshoot and hit $300 in one day? It means that if you stay at $1,000 in profits for the challenge, you will not pass the challenge. But if you add even $50 more to your total profit on any other day, that $300 will be 28.5% of your total profits of $1,050. That way you will qualify for the challenge and exit as a winner.

Why is the Consistency rule important?

The Consistency rule will help guide your trades in a balanced and unemotional way. Sometimes you will be tempted to bet on the farm and shoot for the moon. In those times you will need an anchor that will help you realistically assess your risk-to-reward ratio and then call your shots. The Consistency rule is designed to remove the gambling element from your trades and ultimately protect your portfolio against a complete wipeout. Having a cap on your daily profit will also help you spread your trades more evenly and not get overly emotional about any single one. And finally, the Consistency rule teaches you how to remain successful in the long term.

How to do it and pass the evaluation?

So I have been reading through your comments people are asking How To Stop Losing my Funded Trading Account Challenge because of the Consistency rule. So today, we've asked Rosen our channel trading expert to record a quick 2-minute video for you. Here is the full discussion in the video below:

Trading with the Consistency rule is all about diversification and risk management. More times than we can remember we’ve seen people jump from one trade to another only to see their account dwindle. Without a reliable trading strategy, you are virtually one trade away from incinerating your funds.

The way to maintain the Consistency rule and pass the evaluation is to have a solid trading strategy in place. This trading strategy needs to include: - Diversification: having a wide range of assets in your portfolio is an excellent way to minimize risk without compromising your returns. - Risk management: knowing when to bet and how much is as important as knowing when to stay out and wait for a good moment. A practical way to keep track of how consistent you are in trading is to have a trading journal. Put your trades, holding period, position size, and the end result in there. Do this throughout the entire challenge and then review your performance unbiasedly. Your trading results will spotlight your consistency. Summary “Diversification is key, playing defense is key, and, again, just staying in the game for as long as you can.” That’s how legendary trader Paul Tudor Jones explains his approach to financial markets. Instead of aiming for one super successful trade, he’s taking less risk on any single trade to enjoy consistent profits. And that’s the Consistency rule in a nutshell.

FAQs on Consistency Rule

What is the Consistency rule in a Funded account challenge?

The Consistency rule in the OspreyFX Funded Account Challenge is a key requirement for successfully finishing the evaluation process. The Consistency rule states that no single trading day should make up 30% or more of the total profit over the course of the challenge. Trading is a long-term game that requires patience, emotion control, risk management, and steady results. As you set out to trade, one of the biggest obstacles, especially for beginners, is the desire to make a quick buck. But that urge has more potential to cause trouble since it’s based on luck than to help you learn how to be consistently profitable.

How does the Consistency rule work?

Let’s see an example. We’ll use $10,000 to illustrate. The goal of the challenge is to have at least a 10% gain, or $1,000, in 30 days. What this means is that no single daily profit should exceed 30%, or $300. In other words, maintain a consistent lineup of profits that will not be greater than $300 and you will pass the challenge. What happens if you overshoot and hit $300 in one day? It means that if you stay at $1,000 in profits for the challenge, you will not pass the challenge. But if you add even $50 more to your total profit on any other day, those $300 will be 28.5% of your total profits of $1,050. That way you will qualify for the challenge and exit as a winner.

How to do it and pass the evaluation?

Trading with the Consistency rule is all about diversification and risk management. More times than we count we’ve seen people jump from one trade to another only to see their account dwindle. Without a reliable trading strategy, you are virtually one trade away from incinerating your funds. A practical way to keep track of how consistent you are in trading is to have a trading journal. Put in there your trades, holding period, position size, and end result. Do this throughout the entire challenge and then review your performance unbiasedly. Your trading results will spotlight your consistency.