How a prop firm challenge works: phases, targets and limits
Nearly every challenge follows the same pattern: a profit target, a daily loss limit and an overall loss limit. Here's what each part means.
The three core rules
Profit target: the percentage you need to make to pass the phase, for example 8% or 10%.Maximum daily loss: the most you may lose in one day, for example 4% or 5%.Maximum overall loss: how far the account may fall in total, for example 8% or 10%. Touch either limit and the challenge is over.Phases
A challenge can have one, two or three phases. On a 2-Step, the first usually asks for 8–10% and the second for 5%. After the final phase you receive the funded account.
There are also instant accounts with no challenge at all. Compare the formats in 1-Step vs 2-Step.
Minimum days and time limits
Some firms require a minimum number of trading days (3 or 4, say). Time limits have nearly disappeared, but check whether inactive accounts are closed after 30 days.
After you pass
The firm reviews your trades and asks for identity checks (KYC): usually a passport or driving licence and a proof of address. Then you get the funded account with the same loss rules but no profit target. From here, every profit is split at the agreed rate.
Frequently asked questions
How long does a challenge take?
That's up to you. With no time limit, many traders take between two weeks and two months.
What happens if I fail?
The fee is gone. Some firms offer a discount or a free retry.