Glossary
Evaluation
An evaluation is the test period in which a trader must meet a prop firm's rules before receiving a funded account.
What it means
Evaluation is the general name for the stage many firms sell as a challenge. The trader pays a fee, trades a simulated account and must reach a profit target while staying inside the daily loss limit and maximum drawdown. Some evaluations add minimum trading days or a consistency rule. The point is to show that the trader can make money while managing risk.
Evaluations can have one phase, two phases or, at some firms, three. Firms that sell instant funding skip the evaluation altogether. Before buying, traders should check whether the rules change between the evaluation and the funded account, whether there is a time limit, and whether the fee is refunded with the first reward.
Worked example
Illustrative numbers: a trader buys a one phase evaluation on a $50,000 account with a 10% profit target and a 6% maximum drawdown. They pass when the account reaches $55,000 without equity ever falling below $47,000, then complete identity checks and receive a funded account.
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