Evaluation Phase
An evaluation phase is a defined period during which a trader must achieve a specified profit target on a simulated account while remaining within the proprietary trading firm's maximum drawdown and daily loss limits, with successful completion required to qualify for a funded account.
Evaluations come in single-phase, two-phase, or instant-funding variants. The most common structure is two phases, each with its own profit target and shared drawdown rules. The trader must hit the profit target in the allotted trading days without ever breaching the maximum drawdown or daily loss limit.
This page covers the mechanic; it is not trading advice.
Prop firm rules vary between firms and change frequently. Always verify specific rules directly with your firm before making any decision.
What the evaluation actually measures
The test you must pass before gaining access to the firm's capital. Hit the profit target without breaching the loss rules, and within any time constraints the firm sets. Pass, and the firm issues a funded account; fail, and the evaluation fee is forfeit.
The evaluation is structured as a filter, not a teaching exercise. Industry-wide pass rates fall between 5% and 15% per attempt across the major firms (FPFX Technology dataset, 300,000+ accounts), with an overall payout rate near 7%. The asymmetry is the firm's business model — the evaluation fee from failed challenges is the primary revenue source, with funded-account profits a smaller secondary stream.
A two-phase evaluation in numbers
A trader purchases a $10,000 two-phase challenge for a $100 evaluation fee. Phase 1 profit target: 10% ($1,000). Phase 2 profit target: 5% ($500). Maximum total drawdown: 10% ($1,000). Daily loss limit: 5% ($500). Minimum trading days per phase: 5.
To pass Phase 1, the account must reach $11,000 in net closed profit across at least 5 trading days, without the equity ever falling to $9,000 (total drawdown floor) and without any single day's loss exceeding $500 (daily limit).
Phase 2 begins at a fresh starting balance with the same rule set and a lower target ($500 net profit). On passing Phase 2, the firm issues the funded account at the agreed split. The total simulated profit generated across both evaluation phases is the firm's, not the trader's — payouts only begin from funded-account profit.
Related terms
Common questions
Why are evaluation pass rates so low?
The combination of a fixed profit target and a fixed-percentage drawdown floor with no upward adjustment during the evaluation produces a narrow band of survivable strategies. A 10% profit target with a 10% maximum drawdown means a trader operating with even a moderate risk per trade will breach the floor on a typical losing streak before reaching the target. The industry payout rate of 7% (FPFX Technology dataset) reflects this asymmetry.
Does an evaluation refund the fee if the trader fails?
Most firms do not refund the fee on a failed evaluation. Some firms refund the fee on successful funding — the trader pays the fee upfront, fails or passes, and on the first successful payout from a funded account the firm refunds the original fee. The policy varies; the firm's terms specify the rule.