How challenges work
Profit targets, daily loss limits and static versus trailing drawdown explained.
A prop firm challenge gives you a funded account if you hit a profit target without breaking its loss rules. The rules differ between firms, so read them before you place a trade.
The usual rules
- Profit target, often 8% to 10% for phase one and 5% for phase two.
- Daily loss limit, often 4% to 5%, measured from the day's starting balance or equity.
- Maximum loss, often 8% to 10%.
- Minimum trading days, and sometimes a consistency rule.
Static versus trailing drawdown
A static maximum loss is fixed from the starting balance: on a 100k account with a 10% limit, you fail if equity drops below 90k. A trailing limit moves up as your account makes new highs, so profit you give back can fail the challenge.
The prop tracker in Alchemyfolio shows your target, daily limit and remaining drawdown live, so you always know how much room you have.