Trading Strategies
Practical trading strategies suitable for evaluation challenges — approaches that protect drawdown while generating consistent gains.
What It Means
The goal of an evaluation challenge is not to maximise profit — it is to pass within the rules. This requires a fundamentally different approach compared to live trading. You need strategies that generate steady gains while respecting the 3% daily trailing drawdown and 7% static max drawdown. Aggressive strategies that work in personal accounts often fail evaluations because they create large drawdowns that are difficult to recover from under the daily limit.
Conservative Scalping
Scalping on higher timeframes with tight stop losses is effective for evaluations. Target 5-10 pips per trade with a 1:1 risk/reward ratio or better. Use 1-minute or 5-minute charts for entry timing but always check the higher timeframe trend first. Limit yourself to 3-5 trades per day and stop trading if you hit 0.5% daily drawdown. This approach minimises daily drawdown exposure while compounding small wins.
Scalping Guidelines
With a $50K account and 1:100 leverage, a 5-pip win on a 0.1 lot position generates $5 profit. Scaling to 0.5 lots generates $25 per trade. At 3 winning trades per day, that is $75 daily — well within safe drawdown limits.
Swing Trading with Daily Charts
Swing trading on daily or 4-hour charts avoids the noise of intraday volatility. Use daily support and resistance levels to identify entries, set stops beyond recent swing highs/lows, and target 20-50 pip moves over 1-3 days. This strategy works well with the no-time-limit rule since you can wait for setups without pressure. The key is to keep position size small enough that a stop loss represents no more than 0.5-1% of account equity.
You identify EUR/USD at a daily support level on a $50K account. You enter 0.5 lots with a 20-pip stop loss (total risk: $100, or 0.2% of account). Target is 40 pips ($200). The trade works out over 2 days.
Swing trading with proper risk sizing is a low-stress way to pass evaluations.
Trend Following with Moving Averages
A simple trend-following system using the 50 and 200 EMA can produce consistent results. On the daily chart, buy when the 50 EMA crosses above the 200 EMA (golden cross) and price is above both. Sell when the opposite occurs (death cross). Enter on pullbacks to the 50 EMA rather than chasing breakouts. Use a stop loss 1.5x the average true range below entry. This strategy captures large moves while keeping risk contained.
Mean Reversion Strategies
Mean reversion works well in ranging markets. Identify overextended moves using Bollinger Bands or RSI, then trade the return to the mean. On a 15-minute chart, if price touches the lower Bollinger Band with RSI below 30, look for a buy signal with a stop at the recent swing low. Target the middle band. Keep these trades small (0.2-0.3% risk) since mean reversion can fail in strong trends.
Low-Risk Guidelines
- Risk no more than 0.5% of account per trade during evaluation phases
- Stop trading for the day if you reach 50% of the daily drawdown limit
- Aim for 0.5-1% daily gain — consistency beats large wins
- Use higher timeframes (4H or daily) for direction, lower for execution
- Avoid holding through news events that could gap through your stop
- Track your win rate and average risk/reward to refine your approach
Common Mistakes
- Overtrading — taking too many low-probability setups out of boredom
- Revenge trading after a loss — increasing size to recover quickly
- Ignoring the daily drawdown limit — a single bad trade costs the challenge
- Using a strategy that works in demo but has no edge in live markets