How to set challenge rules that attract serious traders, provide a fair evaluation and protect your firm from excessive payout risk.
The minimum profit the trader must achieve (as a % of starting balance) before the challenge period ends.
The maximum loss allowed in a single calendar day (measured from start-of-day equity or from daily opening balance).
The maximum cumulative decline from the account's peak equity (relative) or from the starting balance (absolute).
The minimum number of calendar days on which the trader must have placed at least one trade.
Some firms impose a maximum number of days to complete the challenge phase.
Prevents a single unusually large winning day from accounting for the trader's entire profit target.
| Rule | Phase 1 | Phase 2 | Funded |
|---|---|---|---|
| Profit Target | 8% | 5% | N/A |
| Daily Loss Limit | 5% | 5% | 5% |
| Max Drawdown | 10% | 10% | 8–10% |
| Min Trading Days | 5 | 3 | N/A |
| Max Duration | Unlimited | Unlimited | N/A |
| Consistency Rule | Optional | Optional | Optional |
| Profit Split | N/A | N/A | 80–90% |
The industry standard profit target for Phase 1 is 8–10% and Phase 2 is 4–5%. Setting targets above 10% for Phase 1 significantly reduces pass rates and may be seen as predatory by experienced traders. Single-phase challenges typically require 8–10%. Instant funding programmes have no profit target — the fee itself is the firm's protection.
Max drawdown of 8–12% is the industry standard. 10% is the most common single figure. Using relative drawdown (from peak equity) is more protective for the firm but harder for traders to understand than absolute drawdown (from starting balance). Most top prop firms now offer both versions at different price points.
Both are recommended. Daily loss limit (typically 5%) protects against a single catastrophic trading day. Max drawdown (10%) protects against gradual account erosion over many days. Using only max drawdown allows a trader to have a very bad single day (e.g. -9.9% in one day) without automatically failing. Using both creates a more robust evaluation.
The minimum trading days rule (typically 3–10 days) prevents traders from getting lucky on a single day of high-volatility news trading and passing the challenge without demonstrating real skill. It forces traders to trade across multiple sessions, making the evaluation more meaningful as a predictor of consistent funded account performance.
All six core rules and optional restrictions are fully configurable in CTATech's challenge engine — no coding required.
CTATech helps you configure competitive, fair challenge rules that maximise sign-ups while managing payout risk.