Prop Firm Challenge Rules: The 7 Limits Every Evaluation Uses

Prop firm challenge rules are the seven limits an evaluation checks on every trade: the profit target, the daily loss limit, the max loss, a consistency or best day rule, minimum trading days, a time limit and conduct rules. Firms change the percentages, but almost every evaluation uses these same seven categories, so once you can read them you can read any program.

Below, each limit is explained in turn, then all seven become a one-page rule sheet on a $100K simulated account. For how an evaluation works overall, start with the prop firm challenge explainer.

Key takeaways

• Seven categories, many numbers: target, daily loss, max loss, consistency, minimum days, time limit and conduct cover nearly every evaluation.
• Two limits are hard stops: the daily loss limit and the max loss usually end the account at the moment of breach.
• Measurement matters as much as the number: balance or equity, static or trailing, server day or calendar day.
• Convert percentages to dollars: a rule you can see in dollars is a rule you can plan around.
• Read the funded rules too: most loss limits carry over.

What are the 7 limits in a prop firm challenge?

Every limit falls into one of two groups: limits that end the account and limits that only delay the result. The table sums them up.

For every rule that also applies on a funded account, read prop firm rules explained.

How does the profit target work?

The profit target is the gain you must reach to complete a phase, set as a percentage of the starting balance. A 10% target on $100K means $10,000 of simulated profit. In a two-phase challenge, the second target is often smaller, for example 5%, or $5,000.

Check three details:

• Balance or equity at the finish: some firms want the target closed, others count open profit.
• Whether the target resets between phases: phase 2 usually starts again from the initial balance.
• Whether other rules must be met at the same moment: a target reached on a day that breaks a best day cap may not count yet.

The target is the only rule you can miss today and retry tomorrow, so it should never drive your trade size.

How is the daily loss limit measured?

The daily loss limit caps how much you can lose in one trading day, usually as a percentage of the starting balance or of the day's opening level. On $100K, a 5% limit is $5,000 and a 4% limit is $4,000.

The number is half the rule. The other half is how it is counted:

• Balance-based: only closed trades count.
• Equity-based: floating loss on open trades counts too, so an open position can breach the limit before you close it.
• Reset time: the "day" usually follows the firm's server clock, not your local midnight.

Read how the daily loss limit is measured before you plan your stop, then set a personal daily stop well below the firm's number.

What is the difference between static and trailing max loss?

The max loss is the floor the account can never touch. It comes in two main forms:

• Static: the floor is fixed, for example 10% below the starting balance. On $100K the floor sits at $90,000 and stays there, so every dollar of profit adds room.
• Trailing: the floor follows the account's high-water mark by a set distance, for example 8%. Profit lifts the floor too, so your room stays roughly the same size.

Firms also differ on when a trailing floor moves and whether it ever stops. Compare static and trailing floors, and if your program trails, read trailing drawdown explained before day one.

What do best day and consistency rules require?

A consistency rule limits how much of your total profit can come from one day. A common version is a best day rule: your best day may not exceed a set share, for example 50%, of the total profit.

If the cap is 50% and your best day made $4,000, you need at least $8,000 of total profit before the target counts. A breach here usually means you keep trading until the share falls. Formulas differ, so read the exact consistency rule in your program.

Do minimum trading days and time limits still apply?

These two rules are about the calendar, and they are often confused:

• Minimum trading days is a floor: you must trade on a set number of days before you can finish, even if you hit the target early.
• A time limit is a deadline: reach the target inside a window or the attempt ends.

A minimum day rule mostly delays a fast finish. A deadline changes behaviour, because it pushes traders to raise size near the end. See a challenge with no time limit.

Which conduct rules apply during an evaluation?

Conduct rules cover how you trade, not how much you make or lose. The common ones are:

• News trading: some firms restrict opening or closing trades around high-impact releases. See news trading rules.
• Weekend and overnight holding: whether positions may stay open over the weekend. See weekend holding.
• Automated trading: whether Expert Advisors and copy tools are allowed, and on what terms.
• Prohibited practices: a closed or open list of strategies the firm does not accept.

Conduct rules are where accounts end "on a technicality," so keep a copy of the list.

How do the 7 limits look in dollars on $100K?

Here is an illustrative rule sheet for a two-phase challenge on a $100K simulated account, with a 10% then 5% target, a 5% daily loss limit and a 10% static max loss. These are the same percentages as the OctoFunded 2-Step.

Worked example. A trader starts phase 1 at $100,000 and reaches $106,000. On a volatile morning, three open trades sit $4,600 in the red. Under an equity-based daily limit, the account is $400 away from a breach, even though no trade has closed. Under a balance-based limit, the account is safe until those losses are realised. The same number, $5,000, behaves very differently depending on how it is counted.

Now take a 1-Step with a 10% target, a 4% daily limit and an 8% trailing max loss. On $100K the daily cap is $4,000 and the floor starts at $92,000. If the account peaks at $105,000, a simple trailing floor would sit at $97,000. Distance to the floor stays $8,000 instead of growing, which is why trailing programs call for small, steady size.

How do you check a program's rules before you buy?

Use this list on any evaluation:

1. Find all seven limits in the official rules page, not in a summary.
2. Write each one in dollars for the account size you plan to buy.
3. Check how each is measured: balance or equity, static or trailing, server day.
4. Mark which rules end the account and which only delay the result.
5. Read the conduct list for news, weekends, EAs and prohibited practices.
6. Read the funded rules so the evaluation habits carry over.
7. Compare your worst historical day with the daily limit. If it does not fit, choose different limits.

Once the limits are on paper, build a risk plan for a challenge around them, and read why traders fail prop firm challenges to see which limits catch people most.

How OctoFunded does it

The rules below are the program terms. All accounts use simulated capital and every program is bought with a one-time fee.

• 2-Step: 10% target in phase 1, 5% in phase 2, 5% daily loss limit, 10% static max loss.
• 1-Step: 10% target, 4% daily loss limit, 8% trailing max loss, and your best day may be at most 50% of total profit.
• Instant Funded: no evaluation phase, with its own limits in the program rules.
• Time limit: none on any program.
• Automation: EAs are allowed under the same loss limits as manual trading.
• After the evaluation: on the 1-Step and 2-Step, the fee is refunded with the first payout, subject to the program rules.

Full wording is in the OctoFunded program rules. To see how the programs differ side by side, compare 1-Step, 2-Step and Instant.

FAQ

What are the main prop firm challenge rules?

Most evaluations use seven limits: a profit target, a daily loss limit, a max loss, a consistency or best day rule, minimum trading days, a time limit and conduct rules on news, weekends and automated trading. Firms change the numbers, not the categories.

Which prop firm challenge rule ends the account?

The daily loss limit and the max loss usually end the account the moment they are breached. A missed profit target, a best day cap or a minimum day count normally delays the result instead, but check the wording at your firm.

Is the daily loss limit based on balance or equity?

It depends on the firm. Some measure closed results only, others include floating loss on open trades. If equity counts, an open trade can breach the limit before you close it, so plan your daily stop on equity.

Do challenge rules change once I am funded?

Loss limits usually stay in place on the funded account, while the profit target goes away and payout rules are added. Read the funded section of the program rules before you start the evaluation, not after.

What are the OctoFunded challenge rules?

The 2-Step has a 10% target in phase 1 and 5% in phase 2, a 5% daily loss limit and a 10% static max loss. The 1-Step has a 10% target, a 4% daily loss limit, an 8% trailing max loss and a 50% best day cap. Neither has a time limit, and EAs are allowed.

Read the limits before you pick a size

Choose the program whose seven limits fit how you already trade. OctoFunded runs the 2-Step, 1-Step and Instant Funded on simulated capital, with a one-time fee, no time limit and EAs allowed. OctoFunded also offers Perpetuals, which trade 24/7, and Futures, each with its own rules.

Compare the programs and their limits