Evaluation

An evaluation — also called a challenge — is a paid trial period during which a trader must hit a defined profit target while staying within drawdown and other risk rules. Passing the evaluation qualifies the trader for a funded account, typically with their evaluation fee refunded after the first payout.

Evaluations come in three main shapes: one-step (single profit target, single phase), two-step (profit-target phase followed by a verification phase with a lower target), and three-step (rare, used by a few legacy programs). The two-step is currently the dominant model in retail prop trading.

The typical structure: an evaluation fee of $50–$500 depending on account size, an 8–10% profit target in phase 1 and 5% in phase 2, a max drawdown of 5–12%, and various rules around minimum trading days, news trading, and consistency. The evaluation almost always runs on a simulated account; the funded account that follows is usually also simulated, with payouts coming from the firm's fee pool rather than real trading profits.

Evaluations exist primarily as a screening and revenue mechanism. The firm earns fees from the large majority of traders who fail and pays the small share who pass. When comparing evaluations, focus on the realistic difficulty of the ruleset, not just the headline profit target.