Funded Account

A prop trading evaluation is a structured trading challenge with defined rules. The trader trades a simulated account and must reach a profit target without breaching the firm's loss limits: a maximum drawdown limit and, at many firms, a daily loss limit. Some firms set a deadline for each phase; others set none. Only the evaluation or subscription fee carries financial risk during the challenge.

The rules screen for consistency, not for one-day winners. At firms that apply a consistency rule to the evaluation, reaching the profit target through a single oversized day does not complete the pass: the pass is delayed, or the target rises, until the profit is spread across more days. Other firms apply a consistency rule only at the funded stage, or not at all. Breaching a loss limit typically ends the evaluation immediately, though the specific consequence (termination, pause, or reset) varies by firm.

Many evaluations also require a minimum number of trading days before the trader can request the funded account. The count varies by firm and product, from none to four or five days on the current products checked, and so does what counts as a trading day. The minimum stops a pass completing on a single day; on its own it does not stop the profit coming from one day, which is the consistency rule's job. Some firms additionally restrict trading around scheduled high-impact news events (often only on the funded account), prohibit weekend holding, or limit hedging across the firm's account family.

Once the trader passes, the firm provisions a funded account: a new account, typically simulated, with the chosen capital allocation. The balance, simulated at most firms, is the firm's, not the trader's. Profit on the account earns the trader a percentage of the net simulated total, paid in cash on the firm's payout schedule. Funded accounts usually carry drawdown and daily loss rules similar to the evaluation's, but the rules and the consequence of a breach can change at funding: at some firms a maximum-loss breach that a paid reset can undo during the evaluation closes a funded account permanently.

Evaluation types

Prop programmes come in three common structures: 1-phase and 2-phase evaluations, and instant funding with no evaluation. The structure affects how quickly a trader can reach a funded account and what fee and rule trade-offs apply at each stage. Profit targets vary by firm; the table below shows commonly observed ranges. Drawdown and daily loss limits are firm-defined parameters. Always confirm the specific values before starting an evaluation.

Drawdown types

The maximum drawdown is the total loss limit on the account. Three variants of drawdown are in common use: static, trailing intraday, and trailing end-of-day. They differ in how the loss floor is calculated.

Static drawdown sits at a fixed distance below the starting balance. On a $100,000 account with a 10% static drawdown, the floor is $90,000 and does not move with the account's highs. Profit gains expand the buffer between current equity and the floor. Payout policy varies: where a payout returns the balance to the starting level, the static floor typically stays at $90,000, and on some trailing products the limit resets after a payout; confirm the specific firm's policy. This is the more trader-friendly variant — a $5,000 gain widens the survivable loss budget to $15,000.

Equity-based intraday trailing updates the floor in real time as equity rises during the session, including unrealised P&L from open positions. From a new equity high, and before any lock, a trade that runs a further $1,000 into profit raises the floor by $1,000 the moment that floating profit is recorded. Pulling back to the entry erases the floating profit but the higher floor stays. Some firms run a balance-based intraday variant instead, which raises the floor only when a trade closes at a new balance high, so floating profit that is given back never moves it. The equity-based variant is the most punishing: a trader who rides a profitable trade up and gives the profit back ends the session with a meaningfully tighter loss budget than they started with.

Trailing end-of-day (EOD) drawdown updates the floor only at the daily close, based on the highest closing balance recorded at the end of any previous day. Intraday peaks that pull back before close do not move the floor. The floor's position changes only at the close, but it is enforced in real time: equity that falls through it during the session breaches the account. EOD trailing is the more forgiving of the two trailing variants for active intraday strategies.

On trailing accounts that lock, the floor stops rising once accumulated profit covers the original drawdown allowance, plus the lock offset where there is one — the drawdown floor lock. After the lock the floor stays fixed, at the starting balance on some products and slightly above it on others, and the account converts to a static-style rule for the remainder of its life; some products never lock. At firms that do not reset the floor after a payout, withdrawals reduce the buffer even after the floor has locked: on a $100,000 account with a 10% trailing allowance that has already locked at $100,000, a $3,000 withdrawal taken at a $104,000 balance brings the balance to $101,000, cutting the buffer to the locked floor from $4,000 to $1,000.

Hard breach versus soft breach

Breach consequences are firm-defined. The two patterns are hard breach and soft breach.

A hard breach terminates the account immediately. The trader cannot continue trading on it; resuming usually requires buying a new evaluation or a paid reset. Hard breach is the default consequence at most firms for maximum drawdown violations, and for daily loss breaches at firms that treat the daily limit as a hard rule.

A soft breach pauses trading without terminating the account. The session ends; the trader resumes the next session subject to the firm's specific reset rules. Some firms apply soft breach to daily loss violations, treating the daily limit as a circuit breaker rather than a kill switch. The account survives and continues from the next session.

Outcomes diverge sharply between the two patterns. A daily-loss breach at a hard-breach firm ends the account, while the same loss at a soft-breach firm ends the day. Always confirm the specific rule before starting an evaluation. Assuming the gentler interpretation will end an account at firms that take the stricter line.

Payout mechanics

Trader earnings on the funded account are a share of the net simulated profit. That share, the profit split, varies by firm, product and account tier. Major firms publish standard splits of both 80% and 90% to the trader, and some raise the split with scaling or as an optional upgrade.

Payouts run on a cycle. Common patterns are monthly, bi-weekly, and on-demand after a minimum number of trading days. Eligibility rules vary: some firms count a minimum number of trading or winning days, others a minimum number of calendar days since the first trade. Some firms require all positions to be closed before a payout request.

On a $100,000 funded account that closes the month with $4,000 net simulated profit at an 80% split, the trader receives $3,200 in cash and the firm retains $800. At firms that withdraw the full profit each cycle, the account returns to its $100,000 starting balance; firms that cap each withdrawal leave part of the profit in the balance. If instead the month closes at –$1,500, no payout occurs and the account continues at $98,500. The buffer to the floor is now at least $1,500 smaller than at the start of the cycle: exactly $1,500 under a static floor or a trailing floor that did not rise during the month, and more if a trailing floor rose with a new high before the losses.

Net simulated profit is calculated after all per-trade costs the firm models on the simulated account: spread, commission, and overnight swap charges on positions held past the firm's daily rollover time. A trader who sees a $5,000 gross gain on the day's trades but accrued $400 in modelled commissions and swaps closes the day with $4,600 of net simulated profit. Costs count toward the loss limits too, but those limits are measured against equity or balance levels, which at many firms include the floating P&L on open positions; the profit split applies to the net profit of the whole payout cycle.

Scaling plans

Many firms offer a scaling plan: a defined path to grow the funded account size as the trader hits performance milestones. Scaling rewards consistency. Firms that scale capital review performance over a multi-month window, for example a minimum cumulative net gain over four months together with a set number of processed payouts, before each step; the trigger varies by firm.

Step sizes vary by firm; published examples include 25% per step on current plans and 40% per step on one firm's earlier plan, which still applies to older accounts and one product. Where each step applies to the current size, a $100,000 account on a 25% step scales to $125,000, then $156,250, then $195,312.50; a 40% step would reach $274,400 over the same three milestones. Caps are firm-defined; published caps include $2,000,000 of total simulated capital across a trader's accounts and a $4,000,000 maximum account balance.

Drawdown limits and daily loss limits are firm-defined. Forex-prop firms commonly express them as a percentage of starting balance — a 5% daily loss limit on a $200,000 account is a $10,000 daily budget, on a $100,000 tier it is $5,000. Futures-prop firms commonly set a fixed dollar limit for each account tier instead, and the percentage changes from tier to tier — for example, a $2,000 maximum loss on a $50,000 account (4%) and $3,000 on a $100,000 account (3%). The profit split sometimes improves with scaling, with some firms moving from 80% at the entry tier to 90% at higher tiers; that progression is firm-specific.