How To Pass A Prop Firm Challenge Using Market Profile

Passing a prop challenge with out a doubt is very difficult but in this article. I am going to give you a very simple method on how to pass a prop firm challenge using market profile and good risk management. I would suggest that you test this out on a demo to build your own confidence that this works. This will work on most asset classes due to the correlated market hypothesis but you will have different volatility profiles depending on the asset.

The first step on how to pass a prop firm challenge using market profile is getting access to Market Profile, installing it and getting down to a few ground rules. The good news is I have a video here on how to set up market profile for MT4. Once this is done you all set. It's time to pass that prop firm challenge using your brand new Market Profile tool. One more small thing, some brokers don't like API, so we recommend Blackbull Markets in New Zealand for your MT4 account, you can use a live account or a demo account. Download the Blackbull MT4.

The Steps To Pass Your Prop Firm Challenge Using Market Profile

Step 1 - Open up any asset class and configure the market profile to show a weekly profile. A weekly profile consists of 4 hour rotations, a row size of 5 for GBP/USD (I highly recommend starting with FX) or a row size of 10 for WTI Crude for example. Row sizes will differ depending on the assets volatility, so if you get confused with this, you can join my Discord server and DM me for the exact row size that I use. You will now need to set your IB to 5. This will give you a sense of where the early sentiment of the week is leaning and to some degree what kind of range extension you are likely to see.

Step 2 - Look for 2 descending or ascending profiles with higher highs and higher lows or lower lows and lower highs. See example below. Essentially we are looking for profiles moving into a deep discount territory or a high premium territory. In this example we can see traders have aggressively sold the Crude Oil over 2 consecutive weeks. This will create a lot of late shorts and bid side exhaustion.

Step 3 - We now look for the recovery above the high of week 2. We first look for the trigger in that week 3 profile. To do this we split the rotations and wait to see what period rotation will take out that high. In this example it was F period. On seeing the trigger we wait for a pull back into the profile area of week 2, this will likely occur in a major trading period like the NASDAQ open, Chicago Open or the London open. In this case the pull back took us to J and K period. Buying the K period low or mid point of the rotation is great positioning. See illustration below. So now you are long. Time to place stops and manage risk.

Step 4 - Managing risk is really easy when you think about. First you need to know your risk tolerance in financial terms. If you plan to risk $1,000 on a trade then you have to fit that to the volatility of the trade. In this scenario our stop loss can go under the bid stack circled or under value low this is a 2 to 4 point risk. This means you can only really trade half of a contract (mini) or 2-5 micros depending. If you are trading a CFD then it is much easier to take fractional sizes. You can adjust your stop loss dynamically as the trade goes in your favour.

Just to hammer the point home this particular example resulted in a 6 and half point move in Oil over the next 4 weeks. Realistically we would have started to exit around 2 points approximately, since your risk was always dynamic your max loss would have never exceeded your planned capital and was dynamically made smaller as the trade worked. The higher probability of being correct will eventually put you in a commanding position in the long-term.

This is how you pass a prop firm challenge using Market Profile in 2025. I hope you liked the article for more subscribe to the YouTube channel. Till next time, adios!