How to Pass Your Prop Firm Evaluation

The Right Mindset

Before discussing strategy, let us address the psychological foundation. Most traders approach evaluations with the wrong mindset: they see it as a test they need to rush through. This urgency leads to over-trading, excessive risk, and emotional decision-making. The reality is that most evaluations have generous time limits (30-60 days) and moderate profit targets (8-10%).

A 10% profit target over 30 trading days means you need an average daily return of 0.33%. That is less than half a percent per day. When you frame it this way, the challenge becomes much more manageable. Your goal is not to have a spectacular month -- it is to have a consistently positive month with controlled risk. Treat the evaluation as if it were a real funded account from day one, because the habits you build during the challenge are the habits you will carry into funded trading.

Preparation Before You Start

Do not start the evaluation the moment you pay for it (unless the timer starts immediately). Prepare thoroughly:

• Read all the rules carefully. Understand the daily loss limit, overall drawdown, profit target, minimum trading days, and any consistency requirements. Write them down where you can see them during trading.
• Test your strategy on a demo first. Most firms offer free demo challenges. Use these to practice trading within the firm's specific rules and platform. A strategy that works in retail trading may need adjustments for prop firm constraints.
• Know the drawdown calculation method. Is it based on balance or equity? Does it trail? Understanding this can prevent accidental violations that end your challenge.
• Plan your schedule. Identify which trading sessions you will be active in and which days you may need to skip. Having a plan prevents impulsive trading during unfavorable conditions.

Choosing Your Strategy

Not every trading strategy is well-suited for prop firm evaluations. The ideal strategy for a challenge has these characteristics:

• Consistent edge: The strategy should produce regular small wins rather than rare large wins. A strategy that makes 2% once a month is less suitable than one that makes 0.5% several times a week.
• Controlled drawdowns: Maximum drawdowns should be well within the firm's limits. If your strategy historically draws down 8%, it is not suitable for a firm with a 10% max drawdown -- the margin is too thin.
• Clear entry and exit rules: During the pressure of a challenge, you need mechanical rules that remove ambiguity. Discretionary trading works for experienced traders but adds psychological complexity during evaluations.

Popular strategies for evaluations include trend-following on the 1H or 4H timeframes, supply and demand zone trading, and breakout strategies. These tend to offer favorable risk-to-reward ratios and manageable drawdowns. Avoid strategies that require wide stop losses or have long periods without trades.

Time Management

If the challenge gives you 30 days, do not try to pass it in 5. Spreading your trading over the full period reduces the daily pressure and gives you more opportunities to recover from losing days. A simple framework:

• Week 1-2: Trade normally with 1% risk per trade. Focus on executing your strategy cleanly. Target 3-5% profit by end of week 2.
• Week 3: If you are on track (5-7% profit), continue normally. If you are behind, do not increase risk. Stay patient and trust the process.
• Week 4: If you are close to the target, reduce risk to protect your progress. If you are well above, consider stopping early. There is no bonus for exceeding the target.

5 Common Mistakes That Fail Evaluations

1. Over-Sizing Positions

The most common reason for failing evaluations. Traders risk 3-5% per trade because they want to hit the target quickly. Two or three losses and the challenge is over. Stick to 0.5-1% risk per trade maximum.

2. Trading During High-Impact News

Even if the firm allows news trading, high-impact events create extreme volatility that can blow through stop losses via slippage. Unless news trading is your specific strategy with proven results, avoid NFP, interest rate decisions, and CPI releases.

3. Revenge Trading After a Loss

After a loss, take a break. At minimum, wait 30 minutes before the next trade. Better yet, set a rule: maximum 3 losses per day, then stop. There is always tomorrow.

4. Ignoring the Daily Loss Limit

Traders track their overall drawdown but forget to monitor the daily loss limit. One bad day can end the challenge even if you are well above the overall drawdown limit. Set personal alerts at 2% and 3% daily loss.

5. Changing Strategies Mid-Challenge

Stick with one strategy throughout the evaluation. Switching strategies after a losing streak introduces unfamiliar setups and increases the chance of errors. Trust the strategy you prepared with.

Daily Routine Template

A consistent daily routine removes decision fatigue and ensures you are always prepared. Here is a template that works for most time zones:

• Pre-session (30 min before): Review economic calendar, mark key levels on your charts, check any overnight positions, review your trading rules and risk limits
• Trading session (2-4 hours): Execute your strategy. Take only setups that meet all your criteria. Log every trade immediately.
• Post-session (15 min after): Close your platform. Record your P&L, calculate your position relative to daily and overall limits. Note any observations in your journal.
• Review (end of week): Analyze your weekly performance, identify any pattern in wins and losses, adjust the plan for the following week if needed.

Step 2: Verification Tips

If the firm uses a two-step model, the verification phase typically has a lower profit target (5% instead of 10%) and a longer time limit. The key adjustment is to trade more conservatively. You have already proven you can be profitable in Step 1 -- Step 2 is about confirming consistency. Reduce your risk per trade to 0.5% and focus on making steady progress.

After You Pass

Congratulations, but the work is not over. The transition from evaluation to funded account is a psychological shift that catches many traders. Suddenly, the profits are real, and so are the losses. Maintain the exact same risk management rules you used during the evaluation. Do not increase position sizes because the account is "real" now. The rules that got you funded are the rules that will keep you funded.

For more on protecting your funded account, read our risk management guide for funded traders.