Definition
Challenge (evaluation)
The paid test a prop firm uses to qualify traders: reach a profit target without breaching drawdown or the firm's rules.
The challenge is the entry gate: you pay a fee, trade a demo account with the firm's rules applied, and must reach a profit target (typically 8–10%) without touching the max or daily drawdown.
Evaluations come in one, two or three phases — or none (instant funding). Each extra phase usually means a lower fee but a longer road to a payout.
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Related terms
General industry definitions — individual firms define terms differently in their own ToS; the decoded rulebook for each firm is the source of truth. Educational, not financial advice.