Prop Firm Challenges

A prop firm challenge is an evaluation process that prop firms use to find the best traders. This challenge involves trading with a demo account to hit specific profit targets while adhering to risk management rules.

During evaluation, prop firms seek traders who can make consistent profits while complying with their rules. They want traders who trade with a well-thought-out strategy, and you should be ready to deliver.

Meeting profit targets and complying with rules proves that you’re disciplined enough to handle real capital from the prop firm’s coffers. No one wants to give money to a random trader after all. The point of a prop firm trading challenge is to demonstrate your strategic skills as a trader.

Prop firm challenges comprise two phases: the initial evaluation and verification.
The initial evaluation is a demo challenge where you trade with virtual capital. For example, you can trade 200+ crypto assets on Hash Hedge during the evaluation stage.

After the initial evaluation, prop firms still want to verify that you’re a skilled trader, not just one who luckily passed the initial evaluation. You’ll move to the verification phase, which still involves virtual trading, but with higher profit targets and stricter risk management rules.

If you pass both the initial evaluation and verification, you’ve proven your skills as a worthy funded trader. Then, you’ll move to the funding stage to begin trading. Any trading profits in this stage will be shared between you and the prop firm, but you’ll keep the lion’s share.

Prop firms set rules and conditions that you need to follow during your trading evaluation. These rules aren’t overly complex, so don’t be bothered about them. They include:

Prop firms consider several key criteria during the evaluation stage. You should focus on demonstrating these traits, not just making profits. They include:

Prop firms charge money to complete their evaluation and access capital. After all, people generally don’t give money for free. The evaluation fee is also a way to filter out casual traders and focus on the experienced ones who are more likely to pass their prop firm challenges.

Expect to pay an evaluation fee, depending on the amount of money in your intended trading account. For example, Hash Hedge charges a $49 fee for a $5,000 account, $99 for a $10,000 account, and $799 for a $100,000 trading account. This fee grants you access to the trading challenge, and if you pass, you can proceed to the funding stage.

Some prop firms offer free challenges, but with limitations. These free challenges don’t offer access to as much capital as the paid ones. They’re also intensely competitive, wherein passing them doesn’t guarantee getting a funded account.

In contrast, paid prop firm challenges give you access to sizable trading capital. Alongside capital, you can also gain access to expert guidance and software tools that help you refine your trading strategies. Prop firms aren’t just capital allocators. They partner with skilled traders to help them maximize their abilities.

A prop firm evaluation might seem scary, but don’t fret. It can be difficult, but it’s not an impossible task if you prepare both mentally, strategically, and technically.

Preparation starts with mental discipline. You should be able to persevere even when your trading strategy isn’t going well. Remember that prop firms look for disciplined traders, not those who tweak their strategy each time something goes wrong.

Likewise, learn the ins and outs of trading before embarking on your demo challenge. Study your prop firm’s risk management rules and ensure you stick to them. Failure to adhere to the rules usually leads to account termination.

Strategy and discipline are what determine if you pass a prop firm challenge. You need a refined trading strategy that’ll enable you to meet profit targets, and you need discipline to stick to that strategy and manage risk effectively. Likewise, you need to set goals, monitor your performance, and adjust your strategy when necessary, not incessantly.

Prioritize risk control during your demo trading challenge. It might seem enticing to take excessive risks to hit profit targets, but that won’t work most of the time.

Prop firms monitor traders’ risks and terminate accounts deemed too risky, so you shouldn’t fall into this problem. We’ve repeatedly emphasized the importance of studying your firm’s risk management rules and complying with them.

Setting clear goals helps you perform better during the evaluation stage. These goals should align with your prop firm’s requirements.

To make goal-setting more effective, keep a trading journal highlighting all the goals you need to achieve within the challenge period. For example, set profit targets for each week in line with your prop firm’s requirements. The idea is to hone your strategy to meet these goals and adjust it when you don’t get the desired results.

Keeping a trading journal helps you stay focused on your goals and hold yourself accountable for meeting them. It’s like having an invisible partner that constantly nudges you to achieve your aims.

Entering a financial contract with a prop firm isn’t a decision to take lightly. Thorough research helps you make the right decision and maximizes the chances of earning profits for both yourself and the prop firm. Follow the checklist below when researching prop firms:

As a trader, it’s good to acknowledge that you don't know it all and seek assistance from external resources. These include:

Passing your prop trading challenge takes you to the funding stage. In this stage, your prop firm allocates capital to you and provides new rules to be followed to maintain your funding status. You should adhere to these rules and note any new information that your prop firm provides.

At Hash Hedge, passing the initial evaluation and verification takes you to the funding stage to begin trading. With trading accounts ranging from $5,000 to $100,000, you can trade over 200 cryptocurrencies with up to 5x leverage. You’ll keep 80% of the profits, befitting the trader whose strategies made the profits, while Hash Hedge retains a minor 20%. Sign up for Hash Hedge today and begin your prop trading journey.