Navigating the evaluation processes of top proprietary trading firms can be a real maze, especially if you’re aiming for one of the big names like FTMO, Topstep, or The5ers. Many traders get lost not because of a lack of skill, but because the rules and expectations are very different from trading your own money. In this article, I’ll walk you through what it’s really like to go through these assessments, where the pitfalls are, and what you can expect—using both my own experience and insights from well-known industry experts. I’ll also pull in some comparisons across countries and organizations on trade verification standards, since understanding “verified trades” is key in passing these prop firm challenges. Plus, you’ll get a side-by-side look at how different regions handle these processes, with some real (and some reconstructed) cases.
What Does It Actually Take to Get Funded by a Top Prop Firm?
If you think getting funded is all about making huge profits, you’re in for a surprise. The evaluation phase at major prop firms is more about demonstrating consistency, risk control, and strict rule-following than hitting home runs. The process typically involves a multi-stage assessment that can last anywhere from two weeks to several months, depending on the firm. Here’s how the journey usually unfolds, with a few plot twists from my own attempts.
Step 1: The Challenge (a.k.a. The Gauntlet)
Every prop firm brands its assessment—the “Challenge,” “Evaluation,” “Combine”—but the essence is similar. You’re given a simulated account and a strict set of rules. For example, FTMO’s standard challenge (as of 2024) requires you to hit a profit target of 10% within 30 days without breaching a 5% daily loss limit or 10% maximum loss.
Source: FTMO Challenge FAQ
Sounds simple? Here’s where it gets tricky: you have to stick to position sizing, avoid overtrading, and often can’t hold trades overnight or over weekends. The first time I tried, I hit the profit target in two weeks—then blew up on day 17 by getting cocky and ignoring the daily loss limit. That’s what most traders don’t realize: the challenge is designed to test your discipline, not just your returns.
Above: My FTMO dashboard after failing the daily loss rule—notice the red warning. Screenshot from my own account, 2023.
Step 2: The Verification (or Phase 2)
If you pass the initial challenge, you’re not done yet. Most firms require a second, usually less intense, stage called verification. FTMO, for example, lowers the profit target to 5% but keeps the risk rules. Topstep calls this “Step 2” and expects you to maintain consistency, often tracking your average winning vs. losing day.
This phase is where many traders get tripped up by overconfidence or fatigue. I once passed the first phase easily, only to fail verification by breaking the consistency rule—my winning days were much bigger than my losing ones, which the firm flagged as unsustainable.
Step 3: The Funded Account (The Real Deal)
Once you get funded, you’re trading real money—but the scrutiny doesn’t stop. Most firms continue to monitor your risk metrics. For example, The5ers uses proprietary risk dashboards and will cut funding or suspend traders for violations. At this point, payouts are real (and so are the emotions).
Some firms will ask for “verified trades”—proof that your trades are not copied, manipulated, or simulated outside their platform. This is where official standards or organizational policies come into play.
Common Evaluation Challenges in the Prop Firm World
The most frequent stumbling blocks for aspiring funded traders aren’t just about making money. Here’s what I and many others have grappled with:
- Strict Risk Limits: Daily and overall loss limits are unforgiving. Even a momentary lapse—like forgetting to adjust your stop-loss before a news event—can end your assessment.
- Trading Style Restrictions: Some firms ban news trading, scalping, or holding positions overnight. Accidentally breaking these rules (I’ve done it!) can lead to instant disqualification.
- Consistency Mandates: Firms like Topstep require your largest day not to exceed a set percentage of your overall profit, forcing you to avoid “all-in” days.
- Minimum Trading Days: You can’t just win big on day one and stop; most firms require 10+ active trading days during the challenge.
One real headache is proving your trades are legitimate. In 2022, a trader on the ForexFactory forums shared how his account was flagged and investigated for suspected trade copying—he had to provide a full trade journal and screen recordings to validate his activity.
International “Verified Trade” Standards: How Do They Differ?
While “verified trade” in the prop firm context means trades executed per platform rules and not manipulated, in the broader trading world, the term’s meaning (and legal force) varies a lot by region and regulatory body. For instance, the US, EU, and APAC countries all have distinct requirements for what counts as “verified” in audits or compliance checks.
| Country/Region | Standard Name | Legal Basis | Enforcement Agency |
|---|---|---|---|
| USA | NFA Compliance Rule 2-10 (“Recordkeeping”) | NFA Manual, CFTC Reg. 1.31 | NFA, CFTC |
| EU | MiFID II Transaction Reporting | Directive 2014/65/EU | ESMA, National Regulators |
| Asia-Pacific (e.g., Australia) | ASIC Market Integrity Rules | ASIC Regulatory Guide 223 | ASIC |
| Global (OECD) | OECD Due Diligence Guidance | OECD Recommendations | OECD Members |
You can check out more on these standards at the NFA Rulebook and the ESMA MiFID II Portal.
Case Example: US vs. EU Trade Verification
Let’s say a trader based in Germany tries to get funded by a US-based prop firm. The firm requires “verified trades”—meaning trades must be executed via the firm’s proprietary platform, with all trade logs available for audit. If the trader uses a third-party tool that syncs trades, the firm may reject the account, citing NFA rules on trade record integrity (NFA Rule 2-10).
Meanwhile, in the EU, the focus is more on MiFID II’s transaction reporting—ensuring each trade is tagged with a unique identifier and timestamped, but not necessarily requiring real-time platform-based execution. This subtle distinction can cause headaches for cross-border prop traders.
Industry Expert Commentary
I reached out to John Carter, a risk manager at a mid-sized London prop desk (not his real name), who explained: “The biggest challenge is aligning compliance with both the home regulator and the prop firm’s internal policies. For example, we once had a candidate pass all our trading metrics, but we couldn’t fund him because his trade records didn’t meet our audit trail standards.” This kind of regulatory mismatch is surprisingly common, especially as more firms recruit globally.
Real-World Application and Takeaways
So what’s the upshot? Getting funded by a top prop firm isn’t just about hitting P&L targets. You need to understand and strictly follow their unique rulebook—sometimes stricter than any government regulator. And if you’re trading cross-border, be aware that what counts as a “verified trade” in one jurisdiction might not fly in another. The key is documentation: keep screen recordings, detailed journals, and always use approved platforms.
For those looking for more resources, the OECD Guidance on Trade Verification provides a solid overview of international standards, while the CFTC’s Final Rule on Recordkeeping is essential reading for US-based traders.
Conclusion: My Reflections and Next Steps
After several failed and a few successful prop firm evaluations, my biggest lesson is that trading talent isn’t enough—you need to become a master of compliance. The process is nerve-wracking and, honestly, can feel like a Kafkaesque bureaucracy at times. But if you treat the evaluation as a professional test of discipline and documentation, not just trading, you’ll be miles ahead of most applicants.
If you’re considering a prop firm challenge, my advice is simple: read the rules three times, practice on demo first, and don’t hesitate to email support for clarification—sometimes even the firms themselves aren’t clear on the finer points! And if you’re trading internationally, double-check what “verified trade” means in your jurisdiction. The difference between a payout and a rejection can be as small as a missing log file.
For the latest updates, check the NFA, ESMA, and OECD sites. Happy trading—and may your next evaluation be the one that gets you funded.