How Do Prop Firm Challenges Work?

A prop firm challenge is an evaluation process that traders complete to demonstrate their ability to trade while following a firm's predefined rules. Typically, a trader chooses a challenge, selects an account size, trades toward specific objectives while respecting risk limits, and qualifies for the next stage if all requirements are met. The exact structure, rules, and qualification criteria vary between prop firms. 

For traders researching how to pass a prop firm challenge, understanding the rules is just as important as having a profitable trading strategy. Profit targets, drawdown limits, minimum trading days, consistency requirements, and trading restrictions can all affect whether an evaluation is successfully completed. 

What Is a Prop Firm Challenge? 

A prop firm challenge, also called a prop firm evaluation or trading challenge, is a structured test of a trader's performance and risk management. 

The purpose is to evaluate whether a trader can meet specific trading objectives without exceeding the firm's risk limits. 

A challenge may require a trader to: 

• Reach a defined profit target 
• Stay within a daily loss or drawdown limit 
• Stay within a maximum overall drawdown 
• Trade for a minimum number of days 
• Meet consistency requirements 
• Follow restrictions around news, overnight positions, or weekends 

However, there is no universal prop firm challenge structure. Each company can define its own rules and evaluation process. 

Some challenges use one evaluation phase, while others use two or more. Some have minimum trading day requirements, while others do not. Similarly, some firms impose time limits while others allow traders to complete the evaluation without a fixed deadline. 

The terms of the specific challenge therefore matter more than the label itself. 

How Does a Prop Firm Challenge Work?

The typical process can be broken into several steps. 

1. Choose a challenge 

The first step is deciding which evaluation program fits your trading style. 

Prop firms may offer different challenge types based on account size, evaluation structure, drawdown model, and trading conditions. 

Before choosing a program, compare: 

• Account size 
• Profit target 
• Maximum daily drawdown 
• Maximum total drawdown 
• Minimum trading days 
• Time limits 
• Consistency requirements 
• News-trading rules 
• Overnight and weekend rules 
• Trading platform 
• Challenge fee 

The account with the largest nominal balance is not necessarily the best choice. The rules determine how that balance can actually be used. 

2. Select an account size 

Many prop firms offer several account sizes. 

The advertised account size represents the starting balance or notional size associated with the challenge. It should not automatically be interpreted as cash deposited into a personal brokerage account. 

For example, BEM Funding currently lists account sizes ranging from $5,000 to $200,000 across its challenge options. 

The more important question is how the account size interacts with the program's drawdown and risk rules. 

3. Pay the challenge fee, where applicable 

Many online prop firms charge a fee to enter an evaluation. 

The fee can vary depending on the account size and challenge structure. Some firms may also offer different pricing models or promotions.

A challenge fee should be considered the cost of participating in the evaluation—not a deposit that becomes the trader's personal trading capital. 

Always review the firm's current pricing and terms before purchasing. 

4. Trade according to the firm's rules 

Once the challenge begins, the trader needs to follow the applicable rules. 

This is where many evaluations become less about simply reaching a profit target and more about managing risk consistently. 

For example, a trader could reach the required profit target but still fail the challenge by exceeding the maximum drawdown. 

Rules may also restrict specific trading practices. The exact restrictions vary by firm and program.

5. Reach the required objectives 

Most challenges have specific objectives that the trader needs to meet. 

The most common is a profit target. 

However, reaching the target alone is usually not sufficient. The trader may also need to remain within daily and maximum drawdown limits and satisfy any minimum-day or consistency requirements. 

The evaluation is therefore a combination of performance and risk management.

6. Complete the evaluation 

Once all required objectives have been met without violating the applicable rules, the evaluation can be considered complete. 

Some firms may conduct an additional review or verification process before moving the trader to the next stage. 

The exact procedure depends on the firm. 

7. Qualify for the next stage or funded account 

After successfully completing an evaluation, the trader typically moves to the next stage of the firm's program. 

Depending on the firm's model, this may be described as a funded account, trader account, or rewards stage.

This terminology can differ between companies, so traders should check the firm's terms to understand what happens after passing. 

What Are the Typical Prop Firm Challenge Rules? 

Prop firm challenge rules vary considerably. Not every program uses all of the requirements below.

Profit targets 

A profit target is the amount of profit a trader needs to generate during an evaluation. 

For example, a challenge might require the account to reach a certain percentage above its starting balance. 

Profit targets should always be considered alongside drawdown limits. A target that looks low in isolation may still be difficult if the account has a restrictive drawdown structure. 

Daily drawdown 

A daily drawdown or daily loss limit restricts how much an account can lose during a trading day. 

The exact calculation varies. Some firms calculate the limit using balance, equity, or another reference point. 

A trader should understand when the daily limit resets and which positions or costs are included in the calculation. 

Maximum drawdown 

Maximum drawdown is the broader loss limit for an account. 

Depending on the program, it can be fixed or trailing. 

A fixed drawdown generally remains at a defined level, while a trailing drawdown can move upward as account performance increases. 

The calculation method can have a significant impact on trading strategy, so it is important to read the specific rules rather than comparing percentages alone. 

Minimum trading days 

Some challenges require traders to trade on a minimum number of days before they can complete an evaluation. 

Others do not.

This distinction matters particularly for traders who take relatively few, high-conviction trades.

Maximum trading period or time limits 

Some prop firms give traders a defined amount of time to complete a challenge. 

Others offer no maximum trading period. 

A time limit can change how aggressively a trader approaches the evaluation, so it should be considered when comparing programs. 

Consistency rules 

A consistency rule may require trading profits to be distributed across multiple trading days rather than being concentrated in one unusually profitable day. 

The exact formula varies by firm. 

Some programs apply consistency rules during the evaluation, while others apply them after the trader has qualified for the next stage. 

News trading restrictions 

Some firms restrict trading during major economic announcements. 

Others allow news trading. 

If your strategy depends on economic releases, check the challenge's news-trading rules before starting.

Overnight and weekend trading 

Prop firms may also restrict holding positions overnight or over weekends. 

These restrictions can be particularly important for swing traders. 

For example, BEM offers a specific BEM Classic Swing program for longer-term trading, with weekend holding available across supported instruments. 

What Is the Difference Between 1-Step and 2-Step Challenges?

The main difference is the number of evaluation phases a trader must successfully complete. 

A 1-step challenge uses a single evaluation phase. A 2-step challenge requires the trader to complete two separate phases before moving to the next stage.

Feature	1-Step Challenge	2-Step Challenge
Evaluation phases	One	Two
Objectives	Completed in one phase	Separate objectives for each phase
Evaluation length	Potentially shorter	Requires completion of both stages
Rules	Depend on the program	Can differ between phases
Best fit	Traders who prefer a single evaluation	Traders comfortable with a staged process
Main consideration	Rules and drawdown structure	Additional phase and requirements

 

Neither structure is universally better. 

A one-step challenge may appeal to traders who prefer a more direct evaluation. A two-step challenge can provide a staged framework for demonstrating performance. 

The right choice depends on your trading strategy and how the specific program's rules fit that strategy. 

How Do You Pass a Prop Firm Challenge? 

There is no guaranteed method for passing a prop firm challenge. A trader's results depend on their strategy, risk management, market conditions, and ability to follow the program's rules. 

However, several practices can help traders approach an evaluation more systematically.

Understand the rules before trading 

Read the challenge rules before placing the first trade. 

Know exactly: 

• How daily drawdown is calculated 
• How maximum drawdown is calculated 
• When daily limits reset 
• Whether there is a profit target 
• Whether minimum trading days apply 
• Whether there is a time limit 
• Whether consistency rules apply 
• Whether news trading is permitted 
• Whether overnight or weekend positions are allowed 

A trader cannot manage a rule they do not understand. 

Use appropriate position sizing

Position sizing determines how much capital is exposed to each trade. 

Risking too much on a single position can cause an account to approach its drawdown limit quickly, even if the underlying trading strategy has a positive long-term expectation. 

The goal during an evaluation should not simply be to reach the profit target as quickly as possible.

Respect drawdown limits 

Drawdown should be treated as a hard risk boundary. 

A trader who repeatedly approaches the maximum loss limit has less room for normal market fluctuations. Understanding the difference between daily drawdown and maximum drawdown is particularly important.

Avoid overtrading 

A challenge can create psychological pressure to reach the target quickly. 

That can encourage traders to increase position sizes or take setups that they would normally reject. 

A trading plan can help reduce this pressure by defining when to enter, when to exit, and how much to risk. 

Maintain consistency 

Consistency does not necessarily mean making the same amount of profit every day. 

It means applying a repeatable trading process rather than changing risk dramatically because of a short term result. 

If the program has an explicit consistency rule, make sure you understand exactly how it is calculated.

Have a trading plan 

Before starting a challenge, establish rules for: 

• Entry criteria 
• Position sizing 
• Stop-loss placement 
• Maximum daily risk 
• Maximum number of trades 
• Situations in which you will not trade 

The objective is to approach the challenge as a risk-management exercise rather than a race to the profit target.

What Happens After You Pass a Prop Firm Challenge?

After successfully completing a challenge, the next step depends on the prop firm's structure.

The process may include: 

• Verification or review — Some firms may review the account or verify that all rules were followed. 
• Moving to the next stage — In a two-step program, passing the first phase means progressing to the second phase. 
• Accessing the post-evaluation account — After all required phases are completed, the trader may move to the firm's funded or trader account stage. 
• Continuing to follow the rules — Passing an evaluation does not necessarily remove trading restrictions. 
• Becoming eligible for rewards — If the program offers performance-based rewards, the trader may request them once the relevant conditions are satisfied. 

At BEM Funding, for example, BEM One and BEM One Only are single-phase evaluations. Once the evaluation is successfully completed and applicable conditions are met, the trader gains access to a BEM Account with Reward on Demand. 

For BEM's two-step programs, rewards operate under a different cycle. The current BEM FAQ states that the standard reward cycle is 14 days, with a 7-Day Reward Add-On available for applicable programs. 

Prop Firm Challenges at BEM Funding 

BEM Funding currently offers both one-step and two-step challenge structures, allowing traders to compare different evaluation approaches. Its current lineup includes BEM One, BEM One Only, BEM Classic, and BEM Classic Swing. 

BEM One 

BEM One is a single-phase evaluation with a 9% profit target, 3% maximum daily drawdown, and 6% maximum trailing drawdown. The program currently has no minimum trading-day requirement. 

After successfully completing the evaluation, eligible traders can use BEM's Reward on Demand model. Reward on Demand currently comes with an 80% reward share and is subject to a 35% best-day rule, alongside other eligibility conditions. 

BEM One Only 

BEM One Only is another one-step evaluation. It currently uses a 6% profit target, 3% maximum daily drawdown, and 6% maximum drawdown.

It also offers Reward on Demand after successful completion, subject to the program's eligibility requirements. 

BEM Classic 

BEM Classic is a two-step challenge. The current BEM challenges page describes it as a standard two-step structure with 9% and 4.5% targets and static total drawdown. 

Because the two-step structure requires traders to complete both phases, it should be evaluated based on the complete rules of both stages rather than the first-phase target alone. 

BEM Classic Swing 

BEM Classic Swing is BEM's two-step option designed for longer-term trading. BEM states that the program has no swap fees and permits weekend holding across supported instruments. Its current evaluation structure includes a 9% Phase 1 target and a 4.5% Phase 2 target, with specific daily and total loss limits and minimum trading requirements. 

Traders can compare BEM's current options on the All Challenges page, or look specifically at the One Step Challenges and Two-Step Challenges pages. 

The Rewards section provides additional information about how BEM's reward system works. 

BEM accounts operate in a simulated trading environment. BEM states that these accounts are used to evaluate trading proficiency and risk management, and that eligible traders can receive real rewards based on their performance. 

Frequently Asked Questions 

What is a prop firm challenge? 

A prop firm challenge is an evaluation that tests whether a trader can meet predefined performance objectives while staying within specific risk limits. The requirements vary by firm and program. 

How does a prop firm challenge work? 

A trader chooses a challenge and account size, pays the applicable fee, and trades according to the program's rules. The trader must reach the required objectives without violating applicable drawdown or other restrictions. After successfully completing the evaluation, the trader can move to the next stage or funded account, depending on the program. 

How long does a prop firm challenge take?

There is no universal timeframe. Some challenges have maximum time limits, while others do not. The actual duration also depends on how quickly the trader reaches the required objectives while satisfying any minimum trading-day requirements. 

For example, BEM One currently has no minimum trading-day requirement, while BEM Classic Swing requires at least three trading days in each evaluation phase. 

What happens if you fail a prop firm challenge? 

A challenge can be considered failed if the trader violates a rule or reaches a defined loss limit. What happens afterward depends on the firm. Some firms may allow traders to purchase another challenge, but the specific terms should be checked before participating. 

What is the difference between a 1-step and 2-step challenge? 

A 1-step challenge requires traders to complete one evaluation phase. A 2-step challenge requires them to complete two phases, usually with separate objectives. Neither structure is automatically better; the appropriate choice depends on the trader's strategy and the specific rules. 

How do you pass a prop firm challenge? 

There is no guaranteed way to pass. Traders should understand the rules, use disciplined position sizing, manage drawdown carefully, avoid unnecessary overtrading, and follow a defined trading plan. Meeting a profit target is only one part of many evaluations; staying within the program's risk rules is equally important. 

Conclusion 

A prop firm challenge is an evaluation designed to test trading performance and risk management under predefined conditions. The typical process involves choosing a challenge, selecting an account size, paying the applicable fee, trading according to the rules, reaching the required objectives, and qualifying for the next stage. 

The most important thing to remember is that prop firm challenges are not standardized. Profit targets, drawdown limits, minimum trading days, consistency rules, time limits, and trading restrictions can all differ between firms. 

Before choosing a challenge, compare the complete rule set and consider how it fits your actual trading strategy. 

If you are ready to compare different evaluation structures, explore BEM Funding's current challenges and review the available one-step and two-step options.