Best Prop Firms With Challenge
The best prop firm with challenge - Fidelcrest
The five best prop firms with challenge are:
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Fidelcrest: Multi-step evaluation, up to 90% profit split, flexible trading
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Topstep: Experiential learning, realistic objectives, funding opportunities for traders
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Funded Next: Realistic profit targets, up to $200,000 funds, unlimited retakes
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SurgeTrader: 10% profit target, 5% daily loss limit, funded account opportunity
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FTMO: Indefinite trading period, balanced profit targets, modern prop trading
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5.7
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2
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5.28
/10
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3
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6.68
/10
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Prop trading has garnered much attention in the past years, and aspiring traders are eager to prove their skills and get funded. However, in order to do so, they have to pass the evaluation challenges set forth by the prop firms. In this article, the experts at TU will analyze the evaluation criteria and the benefits offered by top prop firms.
What is a prop firm challenge?
A proprietary trading firm evaluation challenge (also known as the prop firm challenge) is a very thorough and robust assessment process that is meant to evaluate the trading and risk management capabilities of those traders who wish to seek to trade with the prop firm’s capital.
The challenges set forth by the prop firm require traders to demonstrate their ability and achieve consistent profits, manage funds, and further maintain their trading activity within predetermined limits of maximum drawdown and losses. The parameters of the challenges may vary, and factors such as minimum/maximum trading days, position sizes, trade durations, and trading strategies differ from one prop firm to another.
The main purpose of these prop firm challenges is to identify skilled traders who have the potential to succeed and manage their trades effectively, and thereby being qualified for a funded trading account. As prop firms cannot fund every trader who applies to their program due to inherent financial risks, these evaluation challenges are important in distinguishing profitable and promising traders from those who may not be skilled enough to handle the responsibilities of trading with the firm’s capital. This challenging evaluation process enables prop firms to build a portfolio of competent and qualified traders.
Top prop firm challenges in 2024 compared
Experts have shortlisted the best prop firm challenges in 2023 and compared them for your understanding:
Fidelcrest - multi-step evaluation, up to 90% profit split, flexible trading
Fidelcrest offers a multi-step evaluation process for traders to showcase their skills and reach profit targets. Traders choose account size and risk level, trade available instruments, and follow either a normal or aggressive strategy. Step 1 has a 60-day trading period, no minimum trading days, and 10% or 20% maximum loss and daily loss limits. Step 2 continues with the Verification account. And finally, Step 3 allows traders to trade with Fidelcrest's capital without profit targets, retaining up to 90% of profits after each trading period.
Topstep - experiential learning, realistic objectives, funding opportunities for traders
Topstep's Trading Combine is an experiential program for futures traders. It simulates markets and rewards traders upon achieving specific objectives. The Maximum Loss Limit (MLL) is based on end-of-day balance. The program includes non-rule violating objectives like the Profit Target, Consistency Target, and Daily Loss Limit. To pass, a trader's best day should not exceed 50% of the profit target. Daily Loss Limits vary based on account size (50K, 100K, or 150K). Essentially, Topstep enables traders with the flexibility to grow and learn without rushing through the evaluation process.
Funded Next - realistic profit targets, up to $200,000 funds, unlimited retakes
Funded Next provides a two-phase Evaluation Model for traders aiming to trade with a funded account. The first phase involves realistic profit targets, and upon reaching them, traders start trading with an 80% profit split, which can increase to 90% based on performance. Traders also have the opportunity to receive up to $200,000 in funds during the Evaluation phase. Additionally, they can earn a 15% profit share during each assessment phase, even while trading with the demo account. The Evaluation Model further allows for a 14-day extension if traders are in profit but can't meet the phase-1 target. Moreover, traders benefit from unlimited free retakes as long as they remain profitable and adhere to the rules. Weekend holding is also available, allowing traders to hold their trades even during weekends, regardless of their preferred trading style.
SurgeTrader - 10% profit target, 5% daily loss limit, funded account opportunity
SurgeTrader's evaluation process starts with the SurgeTrader Audition, which assesses traders' skills, risk management, and profitability. To become a funded trader, participants need to generate a 10% return while maintaining a daily loss limit of 5% and a maximum trailing drawdown of 8%. Unlike other firms, there are no specific minimum trading days or unique trades required to pass the audition. A hard breach of trading rules during the audition results in account access revocation, while a soft breach allows traders to continue but with the trade closed. In either case, traders have the opportunity to start again with a 20% discount for a repeat audition.
FTMO - indefinite trading period, balanced profit targets, modern prop trading
FTMO's Evaluation Process consists of the FTMO Challenge as the first step. Traders must meet specific trading objectives, including a balanced profit target and allowed drawdown, to progress to the verification phase. There is no time limit to pass the profit target, and the trading period is indefinite. The minimum time to complete the FTMO Challenge is 4 trading days and once traders meet all the trading objectives, they can move on to the verification phase. The maximum daily loss during the FTMO Challenge and verification phase is $500, while the maximum loss is set at $1,000 for both stages. Finally, FTMO offers the opportunity for traders to become FTMO Traders connected to their Modern Prop Trading firm after successfully completing the evaluation process.
| Prop Firm | Evaluation Process | Profit Sharing | Trading Period | Maximum Daily Loss | Maximum Loss | Weekend Holding |
|---|---|---|---|---|---|---|
Multi-step evaluation with profit targets |
Up to 90% (scaled) |
60 days |
5% or 10% |
10% or 20% |
Allowed |
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Trading Combine with profit, consistency, and loss objectives |
Up to 90% (scaled) |
Unlimited |
$1,000 (varies) |
$2,000 |
Allowed |
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Two-phase evaluation with realistic profit targets |
Up to 90% (scaled) |
Unlimited |
$500 |
$1,000 |
Allowed |
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SurgeTrader Audition with 10% profit target |
Up to 90% (scaled) |
Unlimited |
$500 |
$1,000 |
Allowed |
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FTMO Challenge with Trading Objectives |
Up to 70% |
Unlimited |
$500 |
$1,000 |
Allowed |
Benefits of participating in a prop firm challenge
1. Skill enhancement
Prop firm challenges serve as an excellent platform for traders to hone their trading skills. Before participating in a prop firm challenge, traders have the option to test out their trading techniques in demo accounts, thereby enhancing their trading strategies and refining their approach for a successful trading setup.
2. Access to larger capital
One of the main advantages of taking part in a prop firm challenge is the opportunity to have access to a greater capital than you currently have. This access gives traders the ability to take larger positions and potentially achieve greater profits for them and, in turn, the prop firm.
3. Potential for higher profits
According to experts, as prop traders have access to a larger capital and have built-in effective risk management techniques, they may achieve higher profits through successful trading. These prop firms also have funded tiers in their existing plans, and profitable traders can get the opportunity to manage more substantial and bigger trading accounts.
4. Learning from experienced traders
Prop firms often have a social platform wherein selected traders can interact and learn from experienced traders within the firm. By engaging with these individuals, traders can gain valuable insights into market trends, incorporate advanced trading strategies, and employ effective risk management techniques that can substantially improve their trading acumen.
5. Real-world experience
Prop firm challenges simulate real-market conditions and trading scenarios, thereby providing traders with live experiences in a risk-controlled environment. This exposure is very important and is needed to instill confidence and competence in navigating difficult market scenarios effectively.
6. Risk mitigation
When a prop trader is trading with the firm’s capital, they are shielded from the full extent of risk using risk management strategies. This is very beneficial for those traders who are cautious about using their own funds or concerned about losing a large chunk of their capital in risky trading. This setup also allows traders to focus on their own trading strategy and not worry too much about the loss of their initial capital.
7. Network expansion
Participating in a prop firm allows traders to build networking relationships with other traders and professionals in the trading community. Once a trader has built a good relationship with like-minded individuals, it can lead to awarding collaborations, knowledge sharing, and exposure to new trading ideas.
What are the conditions in a prop firm challenge?
1. Drawdown limits
One of the most important conditions in a prop firm challenge is the drawdown limits, and traders should be mindful of it. These limits are kept to keep the trader in check and are crucial in determining their risk management capabilities. A trader should understand whether these drawdowns are measured relative to the trading account balance or do they serve as absolute values, thereby allowing them to take trading positions effectively and prudently.
2. Algo trading rules
For those traders who wish to use expert advisors (EAs) or engage in copy trading, it is very important to review and understand the specific rules that a prop firm employs regarding algorithmic trading methods. Some prop firms do not allow algorithmic trading, and some require traders to seek approval before engaging in automated trading strategies.
3. Winning criteria
Different prop firms have different criteria when it comes to evaluating win-rate. Not all of them solely focus on the raw profit that a prop trader achieves. Some of the additional criteria that these firms may value are consistency, risk-adjusted returns, or other factors. Hence, traders should search and understand how the prop firm ranks their participants and what specific criteria they use to determine the winners. This extensive understanding will help traders to align their trading strategy with the firms’ rules and regulations.
4. Additional rules
Apart from the core conditions mentioned above, there are additional requirements that a trader must keep in mind and adhere to while participating in a prop firm challenge. These could include restrictions on holding positions over the weekends, limitations on lot sizes, requirements for maintaining consistent trading activity, and more. It is very important for traders to understand and deploy such rules to ensure that they are compliant with the laws of the prop firms and maximize their chances of success in the prop firm challenge.
5. Risk management
Prop firm challenges often put more emphasis on the importance of effective risk management. Traders are expected to demonstrate their ability to control losses, preserve capital, and avoid undue risks.
6. Account funding and scaling
Traders should inquire about the funding process and scaling opportunities available to successful participants. After successfully completing the challenge, traders may have the opportunity to trade with the firm's capital. Understanding the terms and conditions for funding and scaling may help traders plan their trading strategies accordingly.
How to choose the right prop firm challenge?
1. Research and compatibility
Before taking up a prop firm challenge, one should conduct thorough research to identify those prop firms which fit the ideal trading goals and skill level. Each prop firm challenge comes with its unique set of evaluation processes and requirements, so it is very essential to find one that aligns with your trading objectives.
2. Allowed trading types
Always research the type of trading that is permitted in the prop firm challenge. Some prop firms are restrictive and may only allow day trading, while other prop firms may have limitations on the markets or the financial instruments that can be traded. You should always choose a challenge that lets you trade in a manner that suits your trading style and setups.
3. Evaluation process
One should always understand the evaluation processes set by the prop firm. There are certain challenges that may require you to achieve a certain level of profitability within a specified time frame, or you may have to deploy risk management techniques that could limit your capital input. Thus, you should familiarize yourself with these requirements to adequately prepare and demonstrate your trading strategies.
4. Fees and costs
Before entering a prop firm challenge, you should be mindful of the fees associated with it. Some prop firms may not charge any fees for a challenge, but others might take an upfront fee or a percentage of profits earned during the evaluation period. You should consider these costs very carefully as they would impact your overall returns and influence your decision to participate or not.
5. Reputation and credibility
Always look for reputable and well-established prop firms. You can read reviews of successful traders who have been associated with the prop firm before and should always select such firms that have a track record of fair evaluations. You can also talk to traders who have been selected before and ask them about their experience with the prop firm.
6. Support and resources
Consider the support and resources offered during the challenge. Some firms may provide educational materials, mentorship programs, or access to trading tools and platforms, which can significantly enhance your learning and trading experience.
7. Growth opportunities
Finally, assess the potential for growth and advancement within the firm. A prop firm challenge that leads to a funded account and opportunities for scaling can be highly beneficial for traders aiming to build a long-term trading career.
Expert Opinion
It's important to understand that prop firm challenges are highly competitive - while the top firms only fund a small percentage of applicants, those individuals gain a unique opportunity. My advice is to approach the challenge with discipline and focus on demonstrating your risk management abilities above all else, because most prop firms are not evaluating you based solely on profits, but also on how you handle drawdowns and adhere to trading rules. Make sure your strategy has defined risk parameters that you don't exceed, even on winning trades. Paper trading for an extended period before starting the challenge can help reinforce good habits.
I also suggest journaling your learning experiences along the way - both what goes well and where you can improve. This self-analysis will serve you well whether you pass the initial evaluation or need to retake the challenge down the road.
Remember that prop firm challenges are essentially job interviews for trading positions. Present yourself professionally by trading responsibly and communicating clearly with your evaluation contacts if needed.
FAQs
What are prop firm challenges?
Prop firm challenges are evaluation processes set up by proprietary trading firms to assess prospective traders' skills and suitability to trade with the firm's capital.
Is it easy to pass a prop firm challenge?
Passing prop firm challenges can be challenging, as they require traders to meet specific profit targets and adhere to strict risk management rules.
What is the best strategy for the prop firm challenge?
There is no one best strategy to pass a prop firm challenge. It depends on a trader’s trading strategy and the rules that a trader has to adhere to within a prop firm.
How many people pass prop firm challenges?
The pass rate for prop firm challenges varies from one prop firm to another, and it also depends on the level of difficulty of the evaluation process that a prop firm has.
Methodology for compiling our ratings of prop firms
Traders Union applies a rigorous methodology to evaluate prop companies using over 100 quantitative and qualitative criteria. Multiple parameters are given individual scores that feed into an overall rating.
Key aspects of the assessment include:
Trader Testimonials and Reviews. Collecting and analyzing feedback from existing and past traders to understand their experiences with the firm.
Trading instruments. Companies are evaluated on the range of assets offered, as well as the breadth and depth of available markets.
Challenges and Evaluation Process. Analyzing the firm's challenge system, account types, evaluation criteria, and the process for granting funding.
Profit Split. Reviewing the profit split structure and terms, scaling plans, and how the firm handles profit distributions.
Trading Conditions. Examining leverage, execution speeds, commissions, and other trading costs associated with the firm.
Platform and Technology. Assessing the firm's proprietary trading platform or third-party platforms it supports, including ease of use, functionality, and stability.
Education and Support. Quality and availability of training materials, webinars, and one-on-one coaching.
Team that worked on the article
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).