Prop Firm Challenges: Steps, Rules and Strategies

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The Challenge Principle: Proving Your Skills Before Getting Funded

A prop firm challenge is an evaluation phase where you must demonstrate your trading abilities before accessing a funded account. Concretely, you pay registration fees (generally between €100 and €500 depending on the target capital) to trade on an account under real conditions, but without risk to your own capital beyond these fees.

The objective? Prove that you can generate profits consistently while respecting strict risk management. If you succeed, the prop firm entrusts you with real capital ranging from €10,000 to several million euros, with profit sharing that can reach 90% in your favor.

This approach allows high-performing traders to start trading with little initial capital while benefiting from multiplied earning capacity. To learn more about this business model, check out our article on how prop firms work.

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Different Types of Challenges

The market offers three main challenge formats. Two-phase challenges remain the most widespread: a first evaluation phase followed by a verification phase. Single-phase challenges simplify the process by merging these steps. Finally, some prop firms offer free challenges or instant funding, where you gain direct access to a funded account with more restrictive conditions.

For traders seeking alternatives, some prop firms without challenges offer immediate access to capital, but with often more constraining rules.

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Steps of a Classic 2-Phase Prop Firm Challenge

This is the standard format used by most prop firms (e.g., FTMO, WeGetFunded, and SabioTrade). The trader must first prove their profitability over two consecutive steps.

Phase	Typical Objective	Average Duration	Key Rules
Phase 1: Evaluation	+8 to +10% profit	Unlimited	Respect daily drawdown (3-5%) and total (8-10%)
Phase 2: Verification	+4 to +5% profit	Unlimited	Identical conditions, but no performance pressure

Concrete Example (FTMO – 2025):

• Objectives: 10% (phase 1) / 5% (phase 2)
• Max drawdown: 10%, daily loss: 5%
• Fees: €540 for a €100,000 account
• Payout: up to 90% of profits

Advantage: Offers a good evaluation period and moderate entry cost. Disadvantage: Takes time and requires strict discipline.

Phase 1: Reaching the Profit Target on Time

The first phase requires reaching a predefined profit target, generally between 8% and 10% of the initial balance. On a €100,000 account, this represents €8,000 to €10,000 in gains. Now, most prop firms no longer impose a limited duration, but some prop firms still require a minimum number of trading days (often 5 to 10 days).

This step tests your ability to generate profits proactively. The most well-known prop firm, FTMO, rigorously applies this format.

Discover our detailed review of FTMO, the market leader, to understand its specificities.

Phase 2: Confirming Your Consistency (Verification)

Once phase 1 is validated, you enter the verification phase. The profit target is reduced (approximately 5%). This step aims to confirm that your performances don’t result from simple luck, but from genuine consistent profitability.

Many traders underestimate this phase by relaxing their discipline. Fatal mistake: drawdown rules remain identical and overconfidence can ruin weeks of effort.

Obtaining the Funded Account and Profit Sharing

After validating both phases, you finally access the funded account. Unlike challenges, no profit target is imposed on you. You trade freely while respecting drawdown rules, and the profits generated are shared according to a predefined ratio (70%, 80%, or up to 90% for the trader depending on the prop firms).

It’s at this stage that funded trading accounts become a real solution for professional trading. You can then withdraw your earnings regularly (generally every two weeks or monthly).

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The Single-Phase Challenge: Faster, But More Demanding

This format is gaining popularity in 2025 (e.g., at WeGetFunded and SabioTrade). The trader goes through a single step before obtaining the funded account, with tougher conditions to compensate for the simplicity.

Typical Objective	Authorized Drawdown	Duration	Payout
+8 to +10%	8-10% max	30-60 days (often unlimited)	80-90%

Example (WeGetFunded – 2025):

• Objectives: 10%
• Max drawdown: 6%, daily loss: 4%
• Fees: €579 for a €100,000 account
• Payout: up to 90% of profits

Advantage: Faster process, without double validation. Disadvantage: Lower risk tolerance and stricter conditions (no mistakes allowed).

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Instant Funding: Without Challenge, Direct Access to Capital

This format allows you to trade a real funded account directly without going through a challenge. But beware: conditions are much more restrictive, and starting capital is often limited.

Example (2025)

	Initial Capital	Max Drawdown	Profit Share	Specifics
The Funded Trader – Instant Funding	$10,000 to $100,000	5-8%	50-70%	No challenge, but performance verified before withdrawals
Blue Guardian Direct Funding	$10,000 to $50,000	6%	60-80%	Earnings locked for 30 days before first withdrawal

Advantage: Immediate access to real capital, no test phase. Disadvantage: Low drawdown tolerance, reduced initial capital, high entry fees (often €1,000+).

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Free Challenges and Trial Versions

Some prop firms, including the most well-known FTMO, WeGetFunded, and SabioTrade, offer free challenges or training demos. This allows testing the rules and your strategy before paying for the main challenge.

Example: FTMO offers a 14-day “Free Trial” to test the process and verify your trading style’s compatibility.

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Essential Prop Firm Rules to Respect

Rule	Description	Consequence if Not Respected
Maximum Drawdown	Maximum total loss authorized on the account (often 8 to 10%). Example: on a €100,000 account, max drawdown = €90,000.	Immediate challenge failure and account closure.
Daily Drawdown	Maximum loss authorized on a trading day, generally 4 to 5%. Example: on €100,000, you cannot lose more than €5,000 in the day.	Immediate challenge failure, account invalidated.
Minimum Trading Days	Minimum number of trading days required before validating a phase (generally 5 to 10 days with at least one trade per day).	Challenge not validated even if profit targets are reached.
Weekend Closure	Obligation to close all positions before markets close on Friday (except exceptions on crypto).	Warning or immediate failure depending on prop firm policy.
Mandatory Stop Loss	Each position must have a defined stop loss at the time of opening, to control risk.	Automatic challenge failure or trade cancellation.
News Trading	Prohibition or restriction on trading during high-impact economic announcements (e.g., NFP, CPI, FOMC). Some prop firms prohibit opening or closing positions 2 to 3 min before/after major news.	Trade canceled or challenge failure depending on severity. Can lead to disqualification if the movement is exploited in a “non-compliant” manner.

Maximum Drawdown and Daily Drawdown: Don’t Confuse Them

Maximum drawdown represents the maximum authorized loss from the initial balance of your account. If you start with €100,000 and the limit is set at 10%, your account must never fall below €90,000. Attention: this limit is calculated on the initial balance, not on your current balance.

Daily drawdown limits your losses on a single trading day. With a 5% limit, you cannot lose more than €5,000 in the same day on a €100,000 account. This rule aims to avoid overtrading and emotional decisions after a loss.

Minimum Trading Days and Weekend Management

Most prop firms impose a minimum number of active trading days to validate a phase. Count between 5 and 10 days depending on the companies. A day is considered active as soon as at least one position is opened and closed.

Regarding the weekend, many prop firms prohibit keeping positions open from Friday evening to Monday morning. This rule protects against gap opening risk but requires systematically closing your trades before the weekly market closure.

Specific Rules: Stop Loss, Leverage, Authorized Instruments

Each prop firm defines its own complementary rules. The obligation to place a stop loss on each position is almost universal. Maximum authorized leverage generally varies between 1:10 and 1:100 depending on companies and traded instruments.

Authorized instruments also differ: some prop firms only accept Forex, others include indices, commodities, cryptocurrencies, or stocks. Systematically check these criteria before registering for a challenge.

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Winning Strategies to Succeed in Your Challenge

Preparation Before the Challenge: Backtesting and Forward Testing

Never start a challenge without solid preparation. Backtesting involves testing your trading strategy on historical data to evaluate its potential profitability. Forward testing then applies this strategy under real conditions on a demo account for several weeks.

This double validation allows you to identify flaws in your approach before committing registration fees. Precisely document your trading plan: entry conditions, position sizing, target risk-reward ratio, and exit rules.

Using a Trading Robot to Validate a Challenge

Many traders consider using a trading robot (EA) to automate their challenge passage. This approach has undeniable advantages: elimination of emotional biases, perfect execution of the trading plan, and 24/7 availability.

However, beware of pitfalls. Not all prop firms authorize Expert Advisors, and some impose specific restrictions (maximum latency, prohibited strategy types like high-frequency scalping or arbitrage). Before using an EA, imperatively consult our guide on mistakes to avoid with trading EAs and prop firms.

If you choose this solution, favor an EA whose performances have been validated over several months under real conditions. A robot showing 2-3% constant monthly profitability will be much more reliable than an EA promising 50% but with high volatility.

Money Management and Risk Management During the Challenge

Money management constitutes the pillar of your success. Systematically limit your risk per trade to maximum 1-2% of capital. On a €100,000 account, this means a maximum risk of €1,000 to €2,000 per position.

Precisely calculate your position sizing based on the distance between your entry point and your stop loss. Aim for a minimum risk-reward ratio of 1:2 (win €2 for each euro risked) to ensure profitability even with a 50% success rate.

Absolutely avoid overtrading: favor quality over quantity. Better to make 2-3 excellent trades per week than 20 average trades. To structure your approach, use our detailed winning plan that covers all tactical aspects.

Psychological Discipline: Avoiding Classic Mistakes

Mental discipline makes the difference between failure and success. Classic mistakes to absolutely avoid:

• Revenge trading (wanting to immediately recover a loss)
• Over-leveraging after a series of wins
• Abandoning the initial trading plan
• Rushing to reach the objective at the end of the period
• Trading without conviction just to reach the minimum required days

Keep a detailed trading journal noting not only your operations but also your emotional state. This introspection quickly reveals your behavioral biases and helps you correct them.

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Choosing the Right Challenge According to Your Trader Profile

Beginners: Favor Accessible Challenges

If you’re starting out in the world of prop firms, orient yourself toward challenges with reasonable profit targets (8% in phase 1) and unlimited durations. SabioTrade is ideal for beginners thanks to its flexible conditions and educational support.

Also favor accounts with modest initial capital (€10,000 to €25,000) to limit your registration fees while familiarizing yourself with challenge constraints. This progressive approach allows you to build skills without excessive pressure.

Experienced Traders: Target High Capital Accounts

Confirmed traders with a solid performance history can directly target challenges at $1 million or more. These accounts offer considerably higher earning potential, with monthly withdrawals that can reach several tens of thousands of euros.

Before committing, consult our comparison of the 3 best prop firms which precisely details each company’s conditions according to the target capital level. Experienced traders will also appreciate prop firms offering 90% profit sharing and evolution scales toward even larger accounts.

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Maximize Your Chances of Success

Succeeding in a prop firm challenge requires much more than simple trading skills. Precise understanding of the steps, scrupulous respect of rules, and application of proven strategies constitute the winning trifecta. Whether you’re a beginner or experienced, what’s important is to choose a prop firm aligned with your profile and objectives.

Don’t forget to reduce registration costs with our exclusive promo codes to access the best challenges at lower cost. You can also get a cheaper prop firm account by taking advantage of our regularly updated deals.

Ready to take on the challenge? Select the challenge adapted to your level, meticulously prepare your strategy, and embark on the funded trading adventure. Your future account worth several hundred thousand euros awaits you.