Evaluation

What it means

In a prop firm, the evaluation is the core product. The trader pays a fee, receives a simulated trading account of a stated size, and has to reach a profit target while staying inside a daily loss limit, a maximum loss limit and any other rules the firm publishes. Pass, and the trader moves to a simulated funded stage; break a rule, and the account is closed.

Evaluations come in several shapes: one-step, two-step and three-step programs, programs with or without time limits, and futures-style programs with end-of-day or intraday trailing drawdowns. The structure decides how the firm earns money and how much payout liability it takes on, so it is a business design decision before it is a marketing one.

Most retail prop firms run the evaluation and the funded stage in a simulated trading environment. Firms that state they place some or all trades on live markets should say so plainly and explain how; everyone else should describe the account as simulated everywhere it appears.