In order to pass a prop-firm challenge and become a funded trader, certain conditions and rules must be complied with:

Risk management: Prop traders must adhere to strict risk management rules to safeguard the firm's capital, such as maximum daily and overall losses. If they violate these guidelines, their account may be closed. While some prop trading firms allow traders to retake the challenge, others do not, so it is essential to carefully read the terms and conditions before signing up.

Progression: Prop traders must adhere to a progression scheme. Those who demonstrate safe and effective trading skills may have opportunities to move up the ranks and receive more trading capital. The timeframe and criteria for progression differ across firms and industries. Some firms evaluate traders after three months, while others establish progression targets at the outset.

Tradable assets: The range of tradable assets available to prop traders varies depending on the firm. Some firms focus on Forex or stocks, allowing them to tailor their support and software to specific traders.

Traders can fail a prop firm challenge and lose their initial fee in several ways, with a possible retake depending on the firm's policy:

• Maximum Drawdown: Firms set a loss limit, usually 4% to 10% of the initial balance. A higher limit might increase the upfront cost.

• Maximum Daily Drawdown: Failure can occur if traders lose a set percentage in one day, often 5% of the starting balance.

• Time Limit: Challenges may have deadlines, typically 30 to 180 days. Exceeding this time results in disqualification.

• Profit Targets: Traders must hit profit targets, generally 5% to 10%, to pass.

Despite marketing claims, these challenges are not easy and have multiple failure points.