Glossary
Profit target
The profit target is the amount of profit a trader must make to pass a phase of a challenge.
What it means
Targets are set as a percentage of the starting account size. In two step challenges, a common pattern is a higher target in the first phase and a lower one in the second, for example 8% and then 5%. One step challenges usually have a single target.
Firms differ on how the target is measured. Many count closed profit on the balance, and some require every position to be closed before the phase is marked as passed. Funded accounts usually have no profit target. The trader earns a profit split instead.
Worked example
On a $100,000 account with a 10% profit target, the trader passes the phase when the account reaches $110,000, as long as no loss limit was breached on the way and any minimum trading days are met.
Free tools that use this
- Challenge pass probabilityThis prop firm pass rate calculator estimates how often a strategy with your numbers passes a challenge, by playing the challenge out thousands of...
- Risk to reward calculatorThis calculator turns what a trade risks and what it aims to make into a risk to reward ratio, and shows the win rate you need to break even. In...
- Consistency rule checkerThis consistency rule calculator checks whether your best trading day is too large a share of your profit. In words: divide your best day's profit...
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