Glossary
Prop firm evaluation
A prop firm evaluation (or "challenge") is a test traders pass to receive a funded account: hit a profit target while staying inside strict rules, typically a maximum overall drawdown, a daily loss limit, and sometimes consistency requirements. Most failures are rule breaches driven by risk and discipline errors, not by unprofitable strategies.
Evaluations are graded on risk behavior, which makes them as much a psychological test as a trading one. The profit target tempts oversizing; the loss limits punish it.
Traders who journal each attempt separately — tracking drawdown usage, daily loss patterns, and emotional state — can compare attempts objectively and stop repeating the same breach. That attempt-over-attempt learning is what separates serial failers from funded traders.
Related terms