Evaluation Phase
An evaluation phase is a stage of a proprietary trading firm's assessment in which a trader must reach a specified profit target on a simulated account while staying within the firm's loss rules (a maximum drawdown and, where the firm sets one, a daily loss limit), with successful completion required to qualify for a funded account.
Evaluations have one, two or three phases, depending on the firm and product; instant-funding products skip the evaluation and open a funded account directly. A two-phase structure gives each phase its own profit target under shared drawdown rules. The trader must reach the profit target without breaching the maximum drawdown and must meet any deadline or minimum number of trading days the firm sets. Whether a daily loss limit applies, and whether breaching it fails the evaluation or only stops trading for the rest of that day, varies by firm.
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 simulated 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. At Topstep, few attempts pass: it reports that 16.8% of the Trading Combines started in 2025 were successfully completed and that 33.3% of funded-level participants received a payout. Those are one firm's figures for one year; each firm's published statistics are the reference for that firm.
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% static ($1,000). Daily loss limit: 5% ($500). Minimum trading days per phase: 5.
To pass Phase 1, the account balance must reach $11,000 ($1,000 in net closed profit) across at least 5 trading days, without the equity ever falling below $9,000 (total drawdown floor) and without equity falling more than $500 below the day's starting balance at any point in the day (daily limit; which measure is tested, balance or equity, and the day's reference point vary by firm).
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. Profit made during both evaluation phases is simulated and, on these terms, is not paid out: payouts begin from funded-account profit. Some firms do pay a share later; FundedNext, for example, lists a 15% Challenge Phase Reward on its Stellar 1-Step and 2-Step accounts, paid after the first scale-up.
How prop firm challenges workEach challenge rule in detail: the profit target, the daily loss limit, maximum drawdown, minimum trading days, and the consistency rule.Related terms
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Common questions
Why are evaluation pass rates so low?
Several rules act together. The profit target has to be reached without breaching the loss rules, spread counts against every trade and commission against every trade that carries it, and a daily loss limit or minimum trading days add further conditions. Drawdown floors are static on some products and trail upward on others, even within one firm; a trailing floor stops the buffer widening at the highs it tracks (live equity, closed balance or end-of-day balance, depending on the rule) until the floor locks, where the firm's rule locks it. With a 10% target and a static floor 10% below the starting balance, a trader with a 50% win rate on trades that risk and return the same fixed amount touches the floor first in half of attempts (where touching it counts as a breach), before costs and any daily loss limit; costs move the odds further towards the floor. Topstep's published figures show the outcome at one firm: 16.8% of the Trading Combines started in 2025 were successfully completed.
Does an evaluation refund the fee if the trader fails?
Refund policies differ by firm, and the firm's terms state the rule. Some firms refund the fee after successful funding: the trader pays the fee upfront and, on the first payout from the funded account, the firm refunds it.