If you’ve ever looked at your trading PnL and thought, “I could do more with more capital,” this guide is for you. Proprietary trading firms with challenge accounts for day traders offer a structured path to get funded without risking your own savings. In this article, we’ll break down how challenges work, what to expect, and how to choose the right firm, with practical strategies and examples you can use today.
Having taken these challenges myself, I’ve experienced both success and setbacks, learning exactly what moves the needle for traders. My goal is simple: to help you navigate prop firms with confidence and avoid the costly mistakes I've made.
Introduction
Proprietary trading firms, or “prop firms,” provide traders with access to firm capital in exchange for a share of profits. Instead of depositing your cash into a brokerage account, you complete a structured evaluation, often called a challenge, to demonstrate your risk control and profitability.
Challenge accounts are especially relevant for day traders. They simulate real-world pressure, enforce discipline with strict rules, and offer a route to scale up without personally bearing large drawdowns. This article explains how these challenges work, compares leading firms, and shows you how to stack the odds in your favor.
Understanding Prop Firms and Challenge Accounts
What is a Prop Firm?
A prop firm is a company that backs traders with its own capital. If you pass their evaluation and follow the rules, you trade their funds and share a portion of your profits. Learn more about what is a prop trading firm to understand the business model deeper.
Prop firms differ from traditional brokers. Brokers execute trades for your personal account and earn commissions or spreads. Prop firms evaluate you, fund you, and implement risk management rules. Many modern retail-focused prop firms operate virtually, giving you access to trading platforms, dashboards, and payouts while trading forex, indices, commodities, stocks, or futures via CFDs or exchange-traded futures.
What is a Challenge Account?
A challenge account is an evaluation account with predefined rules. You’re given a simulated balance (for example, $50,000 or $100,000), profit targets to hit, and risk limits you must not breach. Typically, you progress through one or two phases (sometimes three). Pass them, and you move to a funded account that includes real profit splits. For a detailed breakdown, check out what is a prop firm challenge and how to succeed.
The purpose of a challenge is twofold:
It filters for traders who can make money without blowing up.
It trains you to trade within a risk framework, daily loss limits, max drawdown, and consistency rules—mirroring how professional desks operate.
Benefits of Challenge Accounts for Day Traders
Funding Opportunities
The most obvious benefit is access to capital. Many firms fund traders with nominal account sizes ranging from $10,000 to $400,000 or more. While not all capital is “cash” in your bank, what matters is the buying power. If you’ve identified a trading edge, capital magnifies it.
Upon passing the challenge, you can receive profit splits often between 80% and 90%. Some firms also offer scaling plans, increasing your allocation as you demonstrate consistent performance. See which companies are the 2025 highest paying prop firms.
Skill Development
Challenges force you to level up as a trader. You must respect daily loss limits, control position sizes, and avoid impulsive revenge trading. For instance, in my first challenge, I discovered that my biggest flaw wasn’t strategy, it was overtrading following a small loss. The challenge rules cured that habit faster than any book could.
You also learn to trade under pressure. Knowing that you can’t just “reload the account” makes you selective, opting only for your A+ setups, and timing your entries with precision.
Profit Potential
With a funded account and an 80–90% split, even modest consistency can lead to significant profits. For example, if you generate 6% in a month on a $100,000 funded account with a 90% split, that’s $5,400 to you. In contrast, that same 6% on your personal $5,000 account would yield just $300.
Profit-sharing models vary, but the upside can be substantial for traders who manage risk and maintain consistency.
How Do Prop Trading Challenges Work?
Challenge Structure and Requirements
While each firm is unique, many challenges share common elements:
Profit targets: Often between 6–10% in Phase 1 and 4–5% in Phase 2.
Daily loss limit: Typically 4–5% of account equity or starting balance.
Max overall drawdown: Usually 8–12% peak-to-trough.
Minimum trading days: Often 5–10 days per phase to prevent “one-hit wonders.”
Consistency rules: Some firms require positional consistency or restrict news trading and overnight positions.
It’s important to note that daily loss is often measured from the day’s starting balance, not just realized losses. For example, if you start with $100,000 and dip to $94,500 intraday, that’s considered a breach, even if you manage to recover. Read about risk management rules you must follow to pass.
Duration and Phases of Challenges
Time limits vary among firms. Many have shifted to “no time limit” challenges, while others use 30–60 day windows per phase. Typical structures include:
2-phase evaluation: Phase 1 (higher target), Phase 2 (lower target), then funded.
1-phase evaluation: Faster path with stricter risk parameters or higher fees.
3-step programs: Often lower cost but require more time and consistent profitability.
After evaluation, you trade a funded account, still under rules but you receive profit splits and can scale up based on your performance.
Strategies for Success
Here are some practical tactics that have helped me and many traders I’ve coached:
Set a fixed risk per trade: Aim for 0.25–0.5% of the account per trade. On a $100,000 challenge, that’s $250–$500 risk per trade.
Think in R-multiples: If your average winner is 1.5–2R, you may need just 5–8 quality trades to hit Phase 1 targets, rather than 50 random clicks.
Respect the daily loss cap: Stop trading if you hit half of it. For instance, if the daily cap is 5%, cut off at 2–2.5%. This allows you to live to trade another day.
Trade your A+ setups only: Where quality beats quantity. Wait for your optimal setups before executing a trade.
Predefine news rules: If the firm restricts high-impact news trading, stay informed to avoid breaches.
Journal aggressively: Log your entry reasons, exit logic, emotions, and rule adherence. Reflecting on this data can significantly enhance your trading performance.
For example, on a $100,000 Phase 1 challenge with a 10% target, if you risk $500 per trade and average 1.8R on winners with a 45% win rate, you might net approximately 9–12R over 20–25 trades. That’s enough to pass while remaining well within risk limits. See our full guide on how to pass any prop firm challenge.
Top Prop Firms Offering Challenge Accounts
Note: Terms change frequently. Always verify current fees, rules, and availability in your region.
Comparison of Leading Firms
Below are three representative firms favored by many day traders. Two focus on forex/CFD, while one specializes in exchange-traded futures.
FTMO (Forex/CFD)
Challenge type: 2-phase evaluation; no time limit versions available.
Typical targets: Phase 1 10%, Phase 2 5%.
Risk limits: Max daily loss 5%, max loss 10%.
Fees: Vary by account size (approximately low-hundreds to around $1,000+ for larger accounts).
Profit split: Up to 90%.
Payout cycle: Typically from 14 days, with monthly options varying by account.
Extras: Scaling plans, rapid payouts, and comprehensive dashboards.
Learn more: Read our FTMO review.
Topstep (Futures)
Challenge type: 2-step evaluation for futures; subscription-based model.
Targets: Profit targets vary by account size (e.g., $50k, $100k, $150k).
Risk limits: Trailing drawdown and daily loss limits determined by plan specifics.
Fees: Monthly subscription (varies by account size).
Profit split: Competitive, with established payout history.
Payout cycle: Regular payouts once funded; check current rules.
Extras: Robust educational resources and focused futures training.
Explore: See the top 7 futures prop firms in 2024.
The 5%ers (Forex/CFD)
Challenge type: Multiple programs (e.g., High Stakes, Bootcamp).
Targets: Typically lower daily risk with a longer evaluation period; specifics vary by program.
Risk limits: Tight frameworks focused on sustainability.
Fees: Program-dependent; Bootcamp often offers budget-friendly options.
Profit split: Often 50–80% depending on the program and scaling stage.
Payout cycle: Periodic; details vary by program.
Extras: Emphasis on scaling and conservative risk management.
Check out: Our in-depth guide to The 5%ers.
Quick Comparison Snapshot
Firm | Markets | Pricing Model | Risk Style | Best Fit |
|---|---|---|---|---|
FTMO | Forex/indices/CFDs | One-time challenge fee | Clear 5%/10% limits | Balanced challenge for experienced day traders |
Topstep | Futures | Monthly subscription | Trailing drawdown mechanics | Futures-focused traders |
The 5%ers | Forex/CFDs | Program fee; some low-cost options | Conservative risk with scaling | Risk-first traders aiming for gradual scaling |
Fees, splits, and rules are approximate and subject to change. Consult each firm’s website before committing.
Reviews of the Best Prop Firms for Day Traders
Here’s a practical overview based on my own experience, peer feedback, and commentary from the trading community:
FTMO
What stands out: Clear rules, professional presentation, and well-built dashboards. Many traders report smooth payouts and responsive support. The shift toward no time limits helps both swing and intraday traders.
What to watch: The daily loss rule can be taxing if you carry positions into volatile news. Be mindful of equity-based loss calculations, and avoid "recovery" trades late in the session.
Who it suits: Day traders with defined edges who can honor hard stops and pre-plan news exposure.
Topstep
What stands out: A well-established futures brand with structured education and a consistent framework. The trailing drawdown teaches tight risk management and quick trade invalidation, ideal for futures scalpers.
What to watch: The trailing drawdown can feel punishing if you give back open profits. It’s essential to plan exits tightly and avoid significant overnight risks in volatile contracts.
Who it suits: Futures day traders who thrive within rule-based structures and prefer exchange-traded products.
The 5%ers
What stands out: Risk-aware programs focused on rewarding steady performance over high-stakes trades. Their offerings suit patient traders who prefer a gradual ascent in capital.
What to watch: The conservative rules may feel slow if you’re accustomed to aggressive targets. Patience is key here; impulsive traders often struggle.
Who it suits: Day and swing traders who value longevity and incremental growth.
Other firms worth researching include Fidelcrest, FundedNext, City Traders Imperium (CTI), Earn2Trade (futures), and Apex Trader Funding (futures). Some may undergo regulatory scrutiny or operational changes, so always check the current status and community feedback before you sign up.
Common Pitfalls and How to Avoid Them
Reasons Traders Fail Challenge Accounts
Over-leveraging early: Traders try to “get it done fast,” hit the daily loss, and spiral.
Revenge trading: After a loss, some press their trades or take subpar setups to recover lost funds.
Ignoring the news calendar: Violating news restrictions or facing slippage during significant releases.
Rule misunderstandings: Misreading daily loss calculations or max drawdown settings.
Overtrading to meet minimum days: Engaging in tiny scratch trades to pad day counts and then taking full-size losers on poor setups.
The psychology behind trading often proves to be the hidden killer. The moment you start thinking, “I must pass by Friday,” you begin trading not to lose the fee but to execute your plan. I’ve been there. The solution is to detach from outcomes and treat the challenge like a funded account right from the start. For more on mindset, read about trading psychology for funded account challenges.
Tips for Overcoming Challenges
Implement a two-strike rule: If you lose two trades or 1R total in a day, stop trading. Protect your mental capital.
Pre-define your A+ setup: Document it clearly. If that setup isn’t visible, don’t trade, no exceptions.
Run a maximum trades-per-day cap: Three to five trades are sufficient for most intraday strategies.
Utilize soft time windows: Opt to trade only during your best two hours (e.g., New York open). Shut down afterward to maintain focus.
Create a “pre-flight checklist”: Include trend bias, key levels, upcoming news in the next 90 minutes, maximum risk per idea, alerts for price levels, and stops placed.
Weekly reviews: Grade your trades primarily by process, not just by results. Did you follow your rules, size appropriately, and avoid late-day FOMO?
Implementing these small constraints can lead to big consistency improvements. Passing the challenge then becomes a byproduct of repeated good practices. Also see common mistakes in prop firm challenges and how to avoid them.
FAQs about Prop Firm Challenge Accounts
What is a prop firm challenge account?
It's an evaluation account where you trade a simulated balance under strict rules to demonstrate your edge. Achieve profit targets without violating risk limits, and you can earn funding to trade the firm’s capital.
How do prop trading challenges work?
Most involve 1–3 phases with profit targets and drawdown limits. You pay a fee or subscription, trade under defined rules, and if you pass, you transition to a funded account with a profit split.
Which prop firms offer the best day trading challenges?
Popular options include FTMO (forex/CFD), Topstep (futures), and The 5%ers (forex/CFD). The "best" depends on your trading style, market preference, and risk tolerance.
Are prop firm challenges worth it for day traders?
They can be advantageous if you possess a positive expectancy strategy and exhibit discipline. The upsides are access to capital and profit splits; the downsides involve fees and strict rules that may terminate the evaluation quickly if risk management is inadequate.
How can I pass a prop trading challenge?
Maintain small risk per trade (0.25–0.5%), respect half of the daily loss as your personal stop, trade only A+ setups, avoid restricted news trading, and prioritize consistency over speed.
What are the requirements for a prop firm challenge?
Typical requirements include achieving specific profit targets, adhering to daily and overall drawdown limits, maintaining a minimum number of trading days, and complying with news/holding restrictions. Review each firm's rulebook for specifics.
How much can you earn with a prop firm challenge account?
Earnings depend on your performance, account size, and profit split. For example, generating a 4% return on a $100,000 account at a 90% split yields $3,600. Your actual outcomes will vary, and profit is not guaranteed.
How do day traders benefit from prop firm challenges?
They offer a structured environment with clear risk limits, access to larger capital, and the chance to scale as you prove consistency. It serves as a real-world training ground with tangible upside.
How long does it take to complete a prop trading challenge?
Completion varies from a few weeks to several months. Some firms offer no time limit, allowing progression at your own pace. Rushing can often lead to failure.
Are there affordable prop trading challenges?
Yes. Some firms offer lower fees for smaller accounts or subscription-based models. Bootcamp-style evaluations can also be budget-friendly, albeit requiring multiple steps. Check our list of cheapest prop firm challenges for options.
Putting It All Together: A Practical Game Plan
Here’s a concise plan I wish I had when I started:
Choose your market: Decide between Forex/CFD versus futures. Select the firm aligning with your trading style and availability.
Start small: Begin with a smaller account size to familiarize yourself with the rules and pressure dynamics. Upgrade after you pass and secure a payout.
Define risk parameters: Fixed risk per trade, daily cutoff at half the firm’s daily limit, and a maximum weekly drawdown you're unwilling to breach.
Codify setups: Limit yourself initially to one or two A+ setups, expanding only after achieving consistent results.
Build a trade checklist: Include entry criteria, stop placement, target levels, news checks, and position sizing. Review it before each trade.
Journal trading metrics: Monitor win rate, average risk-to-reward ratio, maximum consecutive losses, and time-of-day statistics to guide your strategy adjustments.
Establish payout goals: Aim for modest first payments. Initial wins build trust in your process and in the firm.
Example Schedule for a 2-Phase Challenge
Weeks 1-2: Focus on one setup during your best two-hour trading window. Emphasize process adherence rather than fixation on targets.
Weeks 3-4: If you’re up >3R, reduce position size to preserve gains. Avoid “touching the stove” late in the day.
Phase 2: Repeat with even greater patience, your edge is already established, so don’t risk giving it back.
Risk and Compliance Considerations
Prop firms vary in legality and structure across regions. Some operate with demo accounts employing simulated execution and post-trade profit adjustments. Others may connect you to live, risk-managed accounts.
Before paying a fee:
Confirm jurisdictional rules: Research any relevant regulations or restrictions. You can find guidelines from the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
Review the firm’s terms: Understand rules regarding platform use, spreads, slippage, and news trading.
Verify payout methods and timelines: Look for clear documentation related to payouts.
Seek community feedback: Browse independent trader forums for recent insights on firms.
Assume terms can change: Capture screenshots of the rulebook and keep records for clarity.
If a firm advertises “guaranteed” profits or maintains obscured rules, approach with caution. Professional environments are transparent about risk, not solely the potential for upside.
Conclusion
Prop Firms with Challenge Accounts for Day Traders provide a structured pathway to trade larger capital, sharpen your discipline, and convert consistency into income. The key lies in identifying a firm that aligns with your trading style and then treating the evaluation like a funded account from day one.
Choose your market, set strict risk parameters, and specialize in A+ setups. Start with a smaller challenge, secure your initial payout, and scale thoughtfully. If you’ve taken a challenge before, share your experiences, what worked and what didn’t, to help others learn.
Subscribe for more practical trading guides, firm comparisons, and step-by-step checklists to aid you in passing your next challenge with confidence.
About The Author
Nina Khatri
Nina is a community strategist focused on building vibrant trader ecosystems. She believes that engaged traders are the backbone of successful prop firms. Her content explores how to foster loyalty, spark conversations, and turn traders into brand advocates.
Recent Posts
