April 17, 2025

How to Pass a Prop Firm Challenge: A Complete Step-by-Step Guide

If you’ve been exploring ways to access larger trading capital without risking your own funds, you’ve probably come across the concept of a prop firm challenge. These challenges are the gateway to trading with a funded account, where you can keep a percentage of the profits you make while using the firm’s money.

But here’s the truth — passing a prop firm challenge is not easy. It requires more than just trading skills; it demands discipline, strategy, and a clear plan. This guide will walk you through exactly what a prop firm challenge is, what it takes to succeed, and the actionable steps you can follow to pass it on your first attempt.

Understanding a Prop Firm Challenge

A prop firm challenge is essentially an evaluation process that trading firms use to assess your skills and risk management ability. Instead of giving you capital immediately, the firm sets specific rules and profit targets you must meet within a set time frame.

Typical rules include:

• Profit Target: A set percentage you must achieve (e.g., 8–10%).
  
  

• Maximum Daily Loss: The amount you can lose in a single day without failing the challenge.
  
  

• Maximum Overall Drawdown: The total loss limit over the entire challenge.
  
  

• Minimum Trading Days: Ensures you don’t pass in just one lucky trade.
  
  

• Time Limit: Usually 30 days for phase one and 60 days for phase two (varies by firm).
  
  

Popular prop firms such as FTMO, My Forex Funds, and The Funded Trader offer these challenges to identify traders who can consistently manage risk while generating profits.

Key Benefits of Passing a Prop Firm Challenge

Passing a prop firm challenge is about more than just bragging rights — it can be a game-changer for your trading career.

1. Access to Large Trading Capital

Instead of starting with a small personal account, you could be trading with tens or even hundreds of thousands of dollars. This instantly boosts your earning potential.

2. Keep a Significant Share of the Profits

Most prop firms allow traders to keep 70–90% of their profits. For example, making 5% on a $100,000 account could earn you $3,500 to $4,500 in one month.

3. Low Personal Risk

You’re not risking your own money. If you lose, you simply fail the challenge (or your funded account), but you don’t lose your personal capital — apart from the entry fee.

4. Opportunity to Scale Up

Many firms offer scaling plans, increasing your funded account size over time if you remain consistently profitable.

5. Professional Development

Trading under strict rules improves discipline, patience, and consistency — all essential traits for long-term success.

Step-by-Step Strategy to Pass a Prop Firm Challenge

Passing requires a structured approach. Here’s a proven method that experienced traders follow:

Step 1: Choose the Right Prop Firm

Not all prop firms are equal. Look for:

• Reasonable Profit Targets (8–10% is standard)
  
  

• Fair Drawdown Rules (5–10% daily or total)
  
  

• Good Reputation (research reviews and payment proof)
  
  

• Flexible Trading Styles (scalping, swing, news trading, etc.)
  
  

Step 2: Understand the Rules Inside Out

Read the challenge guidelines multiple times. Many traders fail not because of bad trades, but because they break rules they didn’t fully understand.

Step 3: Trade a Strategy You’ve Mastered

The challenge is not the time to experiment. Stick to a trading strategy you’ve backtested and are comfortable with — whether that’s swing trading, day trading, or scalping.

Step 4: Manage Risk Like a Professional

• Risk no more than 0.5–1% per trade.
  
  

• Avoid overtrading; quality over quantity.
  
  

• Always set stop-loss orders.
  
  

Step 5: Focus on Consistency, Not Speed

Many traders rush to hit the profit target, which leads to mistakes. Think of the challenge as a marathon, not a sprint. Small, consistent gains will get you across the finish line.

Step 6: Avoid Revenge Trading

After a losing trade, don’t chase the market to recover losses quickly. Stick to your plan and let the market come to you.

Step 7: Track and Review Your Trades

Keep a journal with:

• Entry & exit reasons
  
  

• Market conditions
  
  

• Emotions during the trade
  
  

• Lessons learned
  
  

This habit will improve your decision-making and help you identify patterns in your performance.

Common Mistakes to Avoid

1. Over-leveraging – Taking oversized positions to hit targets faster.
   
   

2. Ignoring Risk Rules – Violating daily loss limits is an instant failure.
   
   

3. Trading Without a Plan – Entering trades impulsively instead of following a proven strategy.
   
   

4. Not Practicing Enough – Attempting the challenge without prior demo or small account experience.
   
   

Who Should Take a Prop Firm Challenge?

A prop firm challenge is ideal for:

• Experienced Retail Traders who want to scale without risking large personal funds.
  
  

• Disciplined Part-Time Traders looking to transition into full-time trading.
  
  

• Skilled but Underfunded Traders who can trade profitably but lack enough capital to make meaningful returns.
  
  

However, if you are completely new to trading, it’s wise to spend time learning, backtesting, and trading on demo accounts before attempting a challenge. Passing requires skill, not luck.

Expected Outcomes After Passing the Challenge

If you pass the challenge and verification phase, you’ll receive a funded account. From there:

• You’ll trade with the firm’s capital.
  
  

• You’ll be paid a profit split, usually monthly.
  
  

• You’ll have the opportunity to scale your account size over time.
  
  

• You’ll gain valuable credibility in the trading community.
  
  

Some traders even make a full-time income from trading funded accounts.

Final Tips for Success

• Trade as if it’s your real account — because it will be soon.
  
  

• Stay patient — you have time, so avoid unnecessary risk.
  
  

• Treat the challenge like a business — keep records, plan ahead, and make informed decisions.
  
  

Conclusion: Your Path to Becoming a Funded Trader

Passing a prop firm challenge is an achievable goal if you have the right strategy, discipline, and mindset. By understanding the rules, sticking to your plan, and managing risk effectively, you can secure a funded account and trade with significant capital — without risking your own.

If you’ve been holding back because you think the challenge is too hard, remember this: it’s not about being perfect — it’s about being consistent. Many traders fail because they rush or let emotions take over. Keep your cool, trade your plan, and success will follow.

Are you ready to take your trading to the next level? Enrol in our Funded Trader Training Program, where we guide you through every step of the challenge with proven strategies, live mentorship, and expert risk management techniques. Learn how to trade like a professional, pass your prop firm challenge, and start earning from a funded account.