MasterFunders risk management rules are specific and built to keep you in the game—if you actually follow them. Here’s how to avoid blowing your account, pass more challenges, and keep your funded status longer.
What Are the Core Risk Management Rules for Prop Trading?
Every prop trader needs five risk management rules: precise position sizing, non-negotiable stop losses, strict max drawdown, daily loss caps, and absolute emotional control.
Here’s how each rule keeps your MasterFunders account alive:
- Position Sizing: Limit every trade to a small chunk of your capital. Pro tip: Never risk more than 1–2% of your balance per trade.
- Stop Losses: Use stop losses on every single trade—no exceptions. This rule keeps one mistake from nuking your account.
- Maximum Drawdown: Track how much you can lose overall before getting cut. If you hit your max drawdown at MasterFunders, your challenge is over (but see “Second Life” below).
- Daily Loss Limit: Don’t blow up in a single day. If you hit your daily loss cap, stop trading immediately.
- Emotional Control: Revenge trading, panic, and overconfidence destroy more accounts than any market move. Stick to your plan and trading checklist.
Table: MasterFunders Challenge Risk Parameters
| Account Size | Profit Target (Step 1) | Profit Target (Step 2) | Max Daily Loss | Max Total Loss | Leverage | Minimum Trading Days | Time Limit | Reset/Second Life |
| $2,500 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
| $5,000 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
| $10,000 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
| $25,000 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
| $50,000 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
| $100,000 | 8% | 5% | 5% | 10% | Up to 1:100 | 0 | Unlimited | Yes |
Want more on how prop trading firms operate?
See What is a Prop Firm? for a straight-up breakdown.
How Does MasterFunders Define and Enforce Risk Limits?
MasterFunders uses daily and total loss limits, challenge rules, and real-time monitoring to keep risk under control. If you blow your account, you get one shot at redemption: the Second Life or Reset feature—no other prop firm is this forgiving.
Risk Limits and Features at MasterFunders (All Account Types):
- Maximum Daily Loss: Lose 5% in one day, your account is locked until the next day. If you break this in challenge or funded phases, that run is over.
- Maximum Total Drawdown: Lose 10% from your starting balance, your challenge or funded account is closed. This is non-negotiable.
- Leverage: Up to 1:100 on most account types, so you can scale trades, but higher leverage means higher risk.
- Profit Targets: 8% in Step 1, 5% in Step 2. You must hit these without breaking loss rules.
- No Minimum Trading Days: Trade at your own pace—speed or patience, you choose.
- Unlimited Time: No deadlines for standard challenges; you can be tactical and wait for high-probability setups.
- Second Life Feature: Blow a qualifying challenge? Email support and restart from where you left off, no need to pay full fees again.
- Reset Feature: Tank your first-ever challenge? If you’re down less than 25% of your max drawdown, request a reset and start over.
Unique Features You Only Get at MasterFunders:
- Second Life: One “do-over” per month if you fail the Qualifying phase. Use it strategically—not as an excuse to gamble.
- Reset Option: Only available on your first challenge, and only if you haven’t lost it all. (No other firm offers both.)
Example: How to Use Second Life After Blowing a Challenge
Let’s say you sign up for a $25,000 challenge and hit the 10% drawdown. Normally, you’d be out—game over. But with MasterFunders, just email support (support@masterfunders.com), ask for your Second Life, and start your next challenge in the Qualifying phase, not all the way back at square one.
Pro tip: Don’t treat Second Life like a get-out-of-jail card. It’s your safety net for real mistakes, not reckless trades.
How Should You Size Positions and Place Stops as a MasterFunders Trader?
At MasterFunders, the only way to survive and scale is to keep your position sizes small (1–2% of account per trade) and set strict stop losses with a minimum 1:2 risk-reward ratio.
Steps for Sizing Your Trades on MasterFunders:
- Calculate 1–2% of Your Balance:
If you have a $10,000 account, never risk more than $100–$200 per trade. This is your maximum loss per position. - Set Your Stop Loss First:
Determine where your trade idea is invalidated. Place your stop there, not where it “feels safe.” - Calculate Lot Size:
Adjust your lot size so that if your stop is hit, you lose no more than your pre-set risk ($100–$200 on $10,000, for example). - Plan Your Take Profit:
Always aim for at least double your risk (1:2 risk:reward). For every $100 at risk, target $200 or more in profit. - Document Every Trade:
Log your position size, stop, and target before entering. MasterFunders expects discipline, not guesswork.
Position Sizing Table (Example for $10,000 Account):
| Risk per Trade | Stop Loss (pips) | Position Size (lots) | Target Profit (1:2) |
| $100 (1%) | 50 | 0.20 | $200 |
| $200 (2%) | 25 | 0.80 | $400 |
Numbers are for example only. Always use a position size calculator for accuracy.
What Happens If You Break the Rules? (Real Example)
Break a hard rule at MasterFunders—like hitting the max drawdown or daily loss cap—and your account is closed, period. If eligible, you can use your Second Life or Reset feature to try again.
Example: How a Losing Streak Can End Your Challenge—And How to Recover
Let’s say you have a $50,000 account and hit your daily loss limit by dropping $2,500 in a single day. That account is locked until the next day. If you keep losing and hit $5,000 total loss, your challenge is over.
But here’s the recovery path:
- If you’re still in your first challenge and not down more than 25%, request a Reset. Start again, with your original balance.
- If you hit the max drawdown in the Qualifying phase, use your Second Life. Email support and resume the challenge from the same phase—no need to start from zero.
Dynamic Risk Management Example:
If you lose two trades in a row, reduce your risk per trade (e.g., from 2% to 1% or even 0.5%). If your performance recovers, gradually scale back up. This keeps your account alive through losing streaks, essential for passing challenges with tight loss limits.
Quick tips for breaking the loss streak:
- Lower your position size after every losing trade.
- Pause trading and review your mistakes before the next session.
- Use a checklist to stop emotional trading after losses.
- Remember: There’s no shame in playing defense when the rules are strict.
Want to see the most common challenge rules across all prop firms?
Read What is a Prop Trading Challenge? for a side-by-side breakdown.
What’s Different About Risk Management on MasterFunders?
MasterFunders gives traders more flexibility, higher earning power, and more tools to recover than most prop firms—if you know how to use them.
How MasterFunders Changes the Game:
- No Minimum Trading Days:
Finish your challenge in a week or take as long as you want. No forced holding periods, no artificial deadlines. - No Weekend or Overnight Restrictions:
Hold trades overnight or over the weekend without penalty. MasterFunders lets you manage trades on your terms. - Higher Leverage:
Most account types offer up to 1:100 leverage. The 24-hour Speed Challenge even offers up to 1:500. Use it with care—overleveraging is the fastest way to get disqualified. - Biweekly Payouts:
Get paid every 14 days, twice as fast as the industry standard. Real profits, real withdrawal options. - Up to 90% Profit Split:
MasterFunders pays a higher cut than nearly any competitor. Start at 80%, reach 90% by meeting specific milestones. - Second Life & Reset Features:
Built-in safety nets for when things go wrong. Most firms simply cut you off. - No EAs or Copy Trading Allowed:
All risk management is manual and personal—no shortcuts. - Education and Scaling Plan:
Access educational resources, trading courses, and webinars for every level. Consistent traders can scale their funded account by 25% every three months, up to double their original balance in a year.
Want to understand all the jargon?
The Prop Trading Glossary covers every term you’ll run into.
How Can You Actually Pass a MasterFunders Challenge Using Risk Management?
You pass a MasterFunders challenge by trading with discipline, controlling losses, and using built-in safety nets wisely—never as an excuse to take reckless risks.
5-Step Action Plan to Pass the Challenge:
- Know Your Limits:
Memorize your daily and total drawdown numbers. Set platform alerts if possible. - Risk Small, Win Big:
Never risk more than 1–2% per trade. Target at least 2:1 reward to risk.
Example: On a $10,000 account, risk $100–$200 per trade, with $200–$400+ target. - Document Every Trade:
Write down entry, stop loss, target, and reason for each trade. Use a trade journal, not your memory. - Adapt with Dynamic Sizing:
Reduce risk after losses; only scale up after wins. Survive losing streaks without blowing your challenge. - Use Second Life/Reset Wisely:
Treat these features as a backup plan, not a license to break the rules. Only use them after genuine error, not after reckless trading.
Daily Risk Management Checklist:
- Review drawdown and daily loss before placing any trades.
- Confirm stop loss and target for every position.
- Log each trade in your journal.
- Take breaks after two consecutive losses.
- Review emotional state—trade only when clear-headed.
- Re-read challenge rules weekly to avoid accidental violations.
Pro Tip:
Using Second Life or a Reset doesn’t mean you can take wild risks. It’s your safety net for real mistakes, not a strategy. Use it once—don’t plan to need it.
Frequently Asked Questions
What’s the max daily loss at MasterFunders?
You cannot lose more than 5% of your starting balance in a single day. Hit this limit and your account is locked until the next day. Repeated breaches will end your challenge or funded account.
Can you hold trades overnight?
Yes, MasterFunders allows you to hold trades overnight and over weekends. You get full flexibility to manage risk and catch long-term moves—just make sure you stay within your loss limits.
How does MasterFunders prevent “revenge trading”?
Strict daily and total drawdown rules, combined with platform monitoring, automatically cut off trading if you break limits. Emotional trading isn’t just discouraged—it’s blocked by the system.
Is there a way to get another shot after failing?
Yes. Use the Second Life feature if you fail the Qualifying phase, or the Reset feature for your first challenge if your loss is less than 25% of the drawdown. Request these by emailing support and start again.
Can you use EAs/copy trading for risk management?
No. MasterFunders does not allow EAs or trade copiers. All risk management decisions must be made by you, the trader. This ensures your results reflect your actual skill and discipline.
Every successful MasterFunders trader masters risk, not just the markets. Want to last more than one challenge? Make risk management your edge—sign up, use your Second Life wisely, and keep your account alive.
