Glossary
Challenge
A challenge is the paid evaluation a trader takes to earn a funded account at a prop firm.
What it means
The trader pays a one-time fee and trades a simulated account under the firm's rules: a profit target, a daily loss limit, a maximum drawdown and sometimes minimum trading days or a consistency rule. Firms also call it an evaluation.
Challenges come in one step and two step versions. In a two step challenge, the trader passes a first phase, then a second phase with a lower target, before being funded. Some firms also sell instant funding, which skips the evaluation, usually for a higher fee and under different rules.
Many firms refund the challenge fee with the trader's first reward. A trader who fails can buy the challenge again, and many firms also sell a reset, which restarts the same challenge for a fee.
Worked example
A trader buys a $100,000 two step challenge. Phase one needs an 8% profit target within a 10% maximum drawdown and a 5% daily loss limit. Phase two needs 5% under the same limits. After passing both and completing identity checks, the trader receives a funded account.
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