Funding challenges are the gateway to virtual funded accounts, allowing traders to prove their skills in simulated environments and access demo capital from proprietary trading firms. These evaluations test discipline, strategy, and risk management, but many traders struggle to pass. At Community. VersoPropFirm, we’ve created a comprehensive guide to funding challenges in 2025, explaining what they are, where traders typically fail, and offering actionable strategies to succeed. Whether you’re a forex scalper, futures day trader, or stock swing trader, this post will equip you with the tools to conquer funding challenges, all while ensuring regulatory compliance.
What Are Funding Challenges?
Funding challenges, also known as evaluation programs, are structured tests offered by prop firms to assess a trader’s ability to manage virtual capital profitably. Traders pay a fee to participate, trade in a demo account, and must meet specific profit targets and risk rules within a timeframe. Successful completion grants access to a virtual funded account with a profit split (e.g., 80-90%).
Key Features of Funding Challenges
- Types: One-step (e.g., Topstep) or two-step (e.g., FTMO) evaluations.
- Profit Targets: Typically 8-10% per phase (e.g., 10% for FundedNext one-step).
- Drawdown Limits: Daily (e.g., 5% for FTMO) and total (e.g., 10% for DNA Funded).
- Timeframe: 10-30 days per phase, with minimum trading days (e.g., 4 for FTMO).
- Cost: $49-$1,500, depending on account size and firm.
- Platforms: MetaTrader 4/5, cTrader, NinjaTrader, TradeLocker, etc.
- Assets: Forex, futures, stocks, indices, commodities, or crypto.
Example: Pay $250 for FTMO’s $50,000 two-step challenge, achieve 10% profit in phase one and 5% in phase two on EUR/USD via MT4, and earn a virtual funded account with a 90% profit split.
Common Funding Challenges Compared
The table below compares funding challenges from five leading prop firms, highlighting account sizes, profit targets, drawdowns, and costs.
| Firm | Challenge Type | Account Sizes | Profit Target | Drawdown (Daily/Total) | Cost | Min. Trading Days |
|---|---|---|---|---|---|---|
| FTMO | Two-step | $10,000-$200,000 | 10%/5% | 5%/10% | $155-$1,080 | 4/phase |
| Topstep | One-step | $50,000-$150,000 | $3,000-$9,000 | None/6% | $49-$165/month | None |
| FundedNext | One- or two-step | $6,000-$200,000 | 10% or 8%/5% | 5%/10-12% | $59-$999 | 5/phase |
| Apex Trader Funding | One-step | $25,000-$300,000 | $2,000-$6,000 | None/6% | $147-$657 | None |
| SabioTrade | One-step | $10,000-$200,000 | 8% | 5%/10% | $119-$999 | 5 |
Insight: Topstep and Apex offer one-step challenges with no daily drawdown, ideal for futures traders, while FTMO’s two-step challenge suits forex traders seeking structure.
Where Traders Fail in Funding Challenges
Despite their appeal, funding challenges have a high failure rate. Based on trader feedback and industry data, here are the top reasons traders fail, visualized in a bar chart.
1. Overtrading
- Why It Happens: Traders take too many trades to hit profit targets quickly, increasing risk.
- Impact: Breaches daily drawdown limits (e.g., 5% for FTMO) or total drawdown (e.g., 10% for FundedNext).
- Example: A trader opens 10 high-leverage trades on GBP/USD in one day, losing 6% and failing FTMO’s daily drawdown rule.
2. Poor Risk Management
- Why It Happens: Traders risk too much per trade (e.g., 5% instead of 1-2%), ignoring position sizing.
- Impact: Small losses compound, hitting drawdown limits.
- Example: Risking 5% per trade on S&P 500 futures in Topstep’s challenge leads to a 6% total drawdown violation.
3. Ignoring Challenge Rules
- Why It Happens: Traders overlook restrictions like news trading bans, minimum trading days, or strategy limits.
- Impact: Automatic disqualification (e.g., trading during major news on FTMO).
- Example: A trader scalps during a U.S. non-farm payroll release on FundedNext, violating news trading rules.
4. Time Pressure
- Why It Happens: Traders rush to meet profit targets within 10-30 days, leading to impulsive trades.
- Impact: Risky trades cause drawdown breaches or insufficient progress.
- Example: A trader needs 2% more profit in SabioTrade’s one-step challenge but takes high-risk trades on the last day, failing the 5% daily drawdown.
5. Emotional Trading
- Why It Happens: Fear of failure or greed drives irrational decisions, like chasing losses.
- Impact: Inconsistent performance and rule violations.
- Example: After a losing trade on Apex Trader Funding, a trader doubles position size to recover, hitting the 6% total drawdown.
Trader Feedback: “I failed FTMO’s challenge by overtrading to hit 10% in a week,” shares a user. “Sticking to 1% risk per trade helped me pass on my second try.”
How to Succeed in Funding Challenges
To pass funding challenges and secure a virtual funded account, follow these actionable strategies:
1. Master Risk Management
- Risk 1-2% per trade to stay within daily and total drawdown limits.
- Use stop-loss orders and calculate position sizes based on account size.
- Example: For a $50,000 FTMO account with a 5% daily drawdown ($2,500), risk $500 (1%) per trade to allow multiple losses without failing.
2. Develop a Trading Plan
- Define entry/exit criteria, strategy (e.g., scalping, swing trading), and asset focus (e.g., EUR/USD, S&P 500 futures).
- Backtest your strategy in a platform demo (e.g., MT4, NinjaTrader) before the challenge.
- Example: A scalper tests a 5-pip strategy on GBP/USD in FundedNext’s MT4 demo, ensuring it meets the 10% profit target.
3. Understand Challenge Rules
- Study profit targets, drawdowns, minimum trading days, and restrictions (e.g., no news trading for FTMO).
- Check platform-specific rules (e.g., TradeLocker settings for DNA Funded).
- Example: Review SabioTrade’s one-step challenge rules to confirm news trading is allowed and plan trades accordingly.
4. Trade Consistently
- Aim for steady gains (e.g., 1-2% daily) rather than rushing for the full profit target.
- Spread trades over the minimum trading days to avoid time pressure.
- Example: In Topstep’s one-step challenge, a trader targets $300 daily profits on a $50,000 account to reach $3,000 over 10 days.
5. Manage Emotions
- Take breaks after losses to avoid revenge trading.
- Use a trading journal to track performance and maintain discipline.
- Example: After a 2% loss on Apex Trader Funding, a trader logs the trade, reviews mistakes, and waits for the next setup.
6. Leverage Firm Resources
- Use coaching (e.g., FTMO’s performance analytics) or educational tools (e.g., Topstep’s webinars).
- Join trader communities to share strategies and insights.
- Example: A trader watches FundedNext’s risk management videos to refine their approach for the two-step challenge.
Explore Top Prop Firms for Demo Accounts
Interesting Insights for Traders
- Data Point: 70% of traders fail funding challenges due to drawdown violations, per industry reports.
- Pro Tip: Many firms (e.g., FTMO, FundedNext) offer free retries or discounts after failed attempts; check their policies.
- Hidden Gem: One-step challenges (e.g., Topstep, SabioTrade) are faster but riskier due to higher profit targets; practice in a demo first.
- Trader Story: “I passed Apex Trader Funding’s one-step challenge by trading only one futures contract daily,” says a user, “focusing on consistency over volume.”
Why Funding Challenges Are Worth It
Funding challenges offer a structured path to virtual funded accounts, helping traders build discipline and access demo capital without real risk. By mastering risk management, understanding rules, and trading consistently, you can join the 20-30% of traders who pass. With firms like FTMO, Topstep, and SabioTrade leading the industry, 2025 is the perfect time to tackle these evaluations.
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Coming Soon: VersoPropFirm’s Virtual Funded Accounts
At VersoPropFirm, we’re developing a proprietary trading firm offering 100% virtual funded accounts, empowering traders to test strategies in simulated environments with platforms like MetaTrader 4, MetaTrader 5, and cTrader. Our demo accounts will comply with all regulations, ensuring a risk-free experience. Join our waitlist to access our innovative virtual trading programs in 2025!