The structure
Most forex prop firms use a two-step model. Step one asks for a profit target of around 8% to 10% within a set of loss limits; step two repeats the exercise with a lower target, usually 5%. Pass both and you receive a funded account. One-step and instant-funding models exist too, with a higher fee or a tighter drawdown in exchange for skipping a phase.
Futures prop firms such as Topstep and Apex use a monthly subscription for the evaluation instead of a one-off fee, with a profit target in dollars and a trailing drawdown that follows your account's high-water mark.
The rules that matter
Every firm has its own wording, but the same handful of rules decide most outcomes.
- Maximum daily loss: how much you can lose in one day, usually 4% to 5% of the starting balance, measured from the day's opening balance or equity.
- Maximum overall loss: the account is closed if equity falls this far below the start, usually 8% to 12%. Trailing versions move up with your profits, which is much harder.
- Profit target: the gain you must reach, per phase, before the phase is passed.
- Minimum trading days and time limits: some phases require a number of active days, and some expire.
- Consistency and news rules: limits on how much of your profit can come from one day, and on trading around scheduled news.
What happens when you pass
The funded account is usually still a simulated account, with the firm paying you a share of the profit you make on it. Splits start at 80% and rise to 90% or more with scaling. Payouts are on a cycle, often every two weeks or monthly, and most firms refund the evaluation fee with the first payout. The account can still be closed for breaching the same loss limits, so the discipline that passed the challenge is the discipline that keeps the account.
Is it worth the fee?
For a trader with a consistent strategy and a small personal account, a funded account is a cheap way to trade size. For a trader still developing, the fee buys a very expensive lesson. The free trials some firms offer, and the discount codes that appear regularly, both reduce the cost of finding out which you are.
Where to go next
Trading forex, CFDs and other leveraged products involves significant risk. This guide is general information, not investment advice. FrugalFX earns affiliate commissions on some links.