The number of phases a trader must complete to qualify for a funded account. Each phase typically includes meeting profit targets while adhering to risk rules.
Some prop firms require multiple evaluation steps before funding traders. Understanding these steps helps traders plan their strategy and manage risk effectively.
A prop firm has a two-step evaluation. In Step 1, a trader must reach a $6,000 profit target without exceeding a $3,000 drawdown. In Step 2, they must trade consistently for 10 days before receiving funding.
The initial amount of capital allocated to a trading account in an evaluation or funded account.
The specific profit amount a trader must achieve to pass an evaluation or progress to a higher account level.
The maximum amount a trader is allowed to lose in a single trading day. Exceeding this limit typically disqualifies the trader. There are different types of loss limits, so it is important to understand the type that applies to a chosen plan.
The maximum permissible loss from the starting balance or peak balance. Breaching the drawdown limit ends the evaluation or funded account.
A scaling parameter that determines the ratio of full contracts to micro contracts a trader is permitted to use.