Fewer than 10% of traders pass a Prop Firm challenge on their first try. If that number has you feeling unsure, or wondering how to pass a prop firm challenge then you’re not alone. These evaluations are tough, but with the right strategy, you can join the elite group trading funded accounts for a living.
This guide breaks down everything you need to know: “what a prop firm challenge involves”, the “best ways to tackle it”, and the key skills to stay ahead. Let’s break it down step by step, so you can trade smarter and achieve real results.
What Is a Prop Firm Trading Challenge?
A Prop Firm Trading Challenge is a test designed to evaluate a trader’s skill, discipline, and risk management before granting access to a simulated funded trading account. Let’s break it down step by step with examples to make it crystal clear.
1. Choosing Your Account Size
When joining a prop firm challenge, you can select from multiple account sizes, typically ranging from $5,000 to $200,000. The percentage of drawdown rules and profit targets remains the same, but the dollar amounts of profit and loss limits scale with the account size.
Example:
If you pick a $10,000 account, your challenge might have:
- $800-$1,000 profit target (8-10%)
- $300-$500 daily loss limit (3-5%)
- $600-$1,000 max total drawdown (6-10%)
For a $100,000 account, the numbers would be 10x larger:
- $8,000-$10,000 profit target
- $3,000-$5,000 daily loss limit
- $6,000-$10,000 max total drawdown
The larger the account, the higher the potential payout.
At FundedTraderMarkets, we offer account sizes ranging from $5,000 to a maximum of $200,000. Here’s why you should choose to trade with FTMarkets.
1. The Challenge Format
You pay a one-time fee (varies from firm to firm) averaging approximately $400 to enter a challenge for a $100,000 account. The rules say:
- You must make at least 8-10% profit to pass (i.e., $8,000-$10,000).
- You cannot lose more than 3-5% in a single day (i.e., max $3,000-$5,000 loss per day).
- Your total loss across the challenge cannot exceed 6-10% (i.e., max $6,000-$10,000 drawdown).
- You must meet the consistency requirement if any (varies across firms).
2. One-Phase vs. Two-Phase Challenges
There are two main types of challenges:
One-Phase Challenge:
- Requires a single profit target (e.g., 8-10% total).
- If you reach the target while following the risk rules, you get access to the simulated funded account.
Example: You start with $100,000, grow it to $110,000 without violating any Drawdown limits, and get funded where you start earning real money from the profit generated.
Two-Phase Challenge:
- The test is split into two steps:
- Phase 1: You need to make 10% profit (e.g., turn $100,000 into $110,000).
- Phase 2: You need to make a smaller profit—usually 5% (e.g., grow $100,000 to $105,000).
- You must follow Drawdown rules in both phases and the drawdown parameters are almost always the same across Evaluation Phases and Simulated Funded Phase.
3. Consistency Score
Some prop firms enforce a consistency rule to prevent traders from relying on one lucky trade to pass the challenge. This rule ensures that your profits come from steady, well-managed trades rather than a single high-risk luck.
How It Works?
- Your biggest winning day cannot account for more than a set percentage (e.g., 20%-50%) of your total profits.
- Some firms require that more than 50% of your profits do not come from one large winning day.
Example:
- You need to make $10,000 to pass the challenge.
- If you make $8,000 in one day and the rest from small trades, you might fail the consistency rule and you will be required to continue trading until you fall at or under the score.
- If the consistency score requirement is 50%, you make $5,000 per day over 2 days, you stay within the consistency rule and you have met the criteria to be upgraded to simulated funded or for a payout in Simulated Funded.
Why It Matters?
This rule forces traders to trade with discipline and strategy, making them more likely to succeed in a Simulated funded account.
Note: Some Prop Firms are not solely relying on the revenue from failed challenges but also monetizing traders’ trading data through quantitative models.
4. The Drawdown Rules
Prop firms use Drawdown Rules to control risk. There are two main types:
- Static Drawdown (Usually observed in Two-Phase Challenge)
- A fixed loss limit that does not change as your balance grows.
- Example: If your max loss limit is $10,000, it stays at $90,000 no matter how much profit you make.
2. Trailing Drawdown (Usually observed in One-Phase Challenge)
- The max loss limit moves as you make profits but never goes back down.
- Example: If the drawdown is $5,000, it starts at $95,000.
- If you grow your account to $105,000, the new drawdown level moves up to $100,000.
- If you drop back to $100,000, you fail the challenge.
The Best Strategies to Pass a Prop Firm Challenge
Passing a prop firm trading challenge is not just about executing good trades—it’s about having the right strategy, discipline, patience, and mindset. Many traders fail not because they lack skill, but because they let emotions, impatience, and poor risk management take control. Here’s a breakdown of the best strategies to ensure you succeed.
1. Master Risk Management (Survival Comes First)
One of the biggest reasons traders fail Prop firm challenges is because they risk too much too soon. Your first goal should be to stay in the game long enough to hit your profit target without violating drawdown limits.
Key Risk Management Rules:
- Risk only 1-2% per trade – A smaller risk per trade gives you more room for mistakes.
- Use a stop loss on every trade – Never let a small loss turn into a disaster.
- Avoid overtrading – Taking too many trades out of frustration or excitement can lead to failure.
- Focus on high-quality setups – Not every price movement is an opportunity.
Example: If you need to make 10% on a $100,000 account, risking 1% per trade means you only need 10 good trades. If you risk 5% per trade, just two bad trades could wipe you out.
2. Control Your Emotions (Patience Wins the Game)
Your worst enemy in a prop firm challenge is often yourself. Fear, greed, and impatience can cause you to break your own rules.
How to Stay Emotionally Strong:
- Detach from money – See the challenge as a test of skill, not a way to make quick cash.
- Avoid revenge trading – If you take a loss, don’t rush into another trade to “win it back.”
- Don’t fear losses – Losses are part of the game; stick to your strategy and move on. Be patient, You don’t need to trade every day. Sometimes, no trade is the best trade.
Example: If you lose two trades in a row, step away from the screen, take a deep breath, and reset. Impulsive decisions will only push you further from success.
3. Stick to a Proven Trading Plan
Many traders fail because they change strategies mid-challenge or chase random setups. The best way to pass is to have a clear plan and follow it.
A Good Trading Plan Includes:
- A clear strategy (e.g., trend following, breakout trading, supply & demand)
- Defined entry and exit rules
- Stop loss and take profit levels for every trade
- A plan for news events (avoid trading during volatile reports like CPI, NFP, FOMC)
- A daily trade limit to prevent overtrading
Example: If your strategy is based on breakout trading, stick to only trading breakouts. Don’t suddenly start scalping or trend-following just because you saw a different setup.
4. Adapt to Different Market Conditions
Markets don’t move the same way every day. Some days will be trendy, some choppy, and others completely unpredictable. The best traders know how to adjust their approach.
How to Adapt:
- If the market is slow, don’t force trades—wait for better setups.
- If the market is trending, ride the trend instead of exiting too early.
- If there’s news, avoid trading just before major announcements.
Speed and consistency are your allies in a prop firm challenge. That’s why scalping and intraday trading stand out as the best strategies to pass a prop firm challenge—they deliver frequent setups to hit your profit goals fast. Swing trading can work, but if your setups only fire once or twice a month, you’ll be racing the clock. Here’s how these high-frequency approaches give you an edge.
5. Scalping
Scalping thrives on capturing small price ticks—5-10 pips in forex, a few cents in stocks—across dozens of trades a day. It’s all about liquid markets (think forex pairs like EUR/USD or crypto like BTC/USD) and lightning-fast execution. You’ll need a rock-solid internet connection—lag can kill a scalp—and a knack for reading short-term volatility via tools like moving averages or Bollinger Bands.
Picture this: You’re trading EUR/USD on a one-minute chart. You’ve got a 5-period SMA and a 20-period SMA plotted. When the 5 crosses above the 20, signaling a micro-uptrend, you buy 0.1 lots at 1.1050. Your take-profit’s at 1.1055 (5 pips), stop-loss at 1.1045 (5 pips). The price ticks up in 45 seconds—you’re out with a small win. Repeat that 20 times a day, and you’re stacking gains while staying under drawdown limits. It’s relentless, but it works.
6. Intraday Trading
Intraday trading keeps you in the action from market open to close, no overnight baggage. It’s less frenetic than scalping but still churns out daily opportunities. On a 15-minute GBP/USD chart, say the price tests 1.3000 support and forms a bullish engulfing candle—a classic buy signal. You enter 0.2 lots at 1.3005, targeting 1.3025 (20 pips) with a stop at 1.2990 (15 pips). Two hours later, you’re up $40. That’s intraday in a nutshell—calculated moves, tight risk, and steady progress toward your target.
7. Static vs. Trailing Drawdown: Know Your Limits
Drawdown rules define your challenge’s guardrails—breach them, and you’re done. Here’s the breakdown:
- Static Drawdown: Fixed to your starting balance. A $100,000 account with a 10% max loss caps you at $90,000. Earn $3,000 (balance $103,000), and that $90,000 floor stays put—giving you a $13,000 cushion. It’s trader-friendly, offering breathing room as you grow.
- Trailing Drawdown: Tied to your account’s peak, Start with $100,000 and a 6% max drawdown ($6,000). Hit $103,000 after a $3,000 win, and your new limit is $97,000 (6% of $100,000). It’s stricter, trailing your profits like a shadow.
Check your firm’s fine print—some mix static and trailing across phases. Misjudge this, and your challenge ends early.
Important: No Prop Firm should have any hidden rule, meaning something that is not stated anywhere, and out of nowhere you have violated a rule that is not stated anywhere on their website. Make sure to scan the Terms and Conditions and all FAQs before deciding to purchase an Evaluation.
Wrapping Up: Your Shot at the 10%
Passing a prop firm challenge isn’t a roll of the dice—it’s a skill you build. Scalping and intraday trading offer the frequency to hit profit targets fast, while smart risk management keeps you alive. Know your drawdown rules, test your strategy, and trade with the precision of a pro. With a few hundred bucks and a steady connection, you’re set to join the 10% who turn simulated accounts into real payouts. Which approach will you master first?