What Is a Prop Firm Challenge and How Does It Work?

A prop firm challenge is a paid evaluation of how you manage risk. You pay a one-time fee, trade a simulated (demo) account under fixed rules and, if you meet them, move on to a simulated funded account where eligible profit can lead to a payout. It is not live market trading, and the fee does not come with a promise of success.

How a challenge works, step by step

1. Choose a plan and a size. Sterling Pips offers a Two-Step and a One-Step challenge. Account sizes are 10K, 25K, 50K and 100K.
2. Pay the one-time fee. The fee pays for access to the evaluation. Fees, payment methods and taxes are shown on the website before you purchase.
3. Trade the challenge account. You trade on Match-Trader, which is available on web and app.
4. Meet the targets and stay inside the limits. Reach the profit target, trade the minimum number of days and never break a loss limit.
5. Move to the funded stage. After you pass, you trade a simulated funded account. It is still a demo account.
6. Ask for a payout when you are eligible. If the funded account shows an eligible profit and your checks are complete, you can make a request.

The four numbers that define an evaluation

Every challenge is built from the same four rules.

• Profit target. On the Two-Step plan it is 10% in Step 1 and 5% in Step 2. On the One-Step plan it is 10% in a single step.
• Max daily loss. How far your equity may fall in one day: 5% on the Two-Step plan, 3% on the One-Step plan.
• Max loss. How far your equity may fall overall: 10% on the Two-Step plan, 6% on the One-Step plan.
• Minimum trading days. 5 days in each challenge step. The funded stage has 0.

On a 100K account, 10% is 10,000 and 5% is 5,000 in the account's currency. Both loss limits are equity-based, which means open trades count as well as closed ones. The guide to daily loss vs max loss walks through this with a worked example, and the Two-Step vs One-Step comparison puts the plans side by side.

What "simulated" means

Every Sterling Pips account, in the challenge and in the funded stage, is a demo account. No real trading takes place and there is no access to live markets. The capital on your screen is simulated capital. It has no monetary value and it cannot be withdrawn.

So where does a payout come from? In the terms, a payout is called a Reward. It is discretionary and it is based on your simulated results in the funded stage. The terms are clear that it is not profit sharing or investment income.

A few more things the program is not:

• It is not an investment service. There is no brokerage, portfolio management, order execution, custody or investment advice.
• It is not a course. It is an evaluation, not training or coaching.
• It is not a promise of funding. The fee pays for access to an evaluation, nothing more.

What the funded stage looks like

Think of the two stages as two different questions. The challenge asks whether you can follow a risk plan while working towards a target. The funded stage asks whether you can keep following it once the target is behind you.

The funded stage is still simulated, and it still has risk limits. If you break a mandatory risk limit there, your participation ends automatically. Leverage in the funded stage is 1:40 on both plans, there are 0 minimum trading days, and the plan lists an 80/20 profit split. Payouts have their own rules for eligibility, verification and limits, so read them before you plan around one.

At the end of each reference period, which is one calendar month by default, positions are closed, capital and risk parameters are reset and the profit and loss for that period is cleared, apart from any Reward that is payable.

Before you purchase

A few facts are worth knowing before you pay.

• You must be 18 or older, or older where local rules require it.
• Citizens and residents of some countries cannot take part. The list is not exhaustive and it can change. You are responsible for checking that the service is legal where you live.
• Fees are non-refundable once access to the challenge has been granted, with the exceptions set out in the terms, such as where mandatory consumer-protection law requires a refund.
• An account with no trades for 30 calendar days closes automatically, with no refund.
• Identity checks (KYC) can be requested at any stage, and they are mandatory before any payout. The details you give must be true and consistent with your purchase details.
• The programs are operated by FX-EDGE V Ltd. Sterling Pips is the brand you purchase from and the team that supports you.

You can see the current plans on the challenges section of the site.

Is a challenge right for you?

Ask yourself three plain questions.

• Can you risk a small, fixed share of the account on every trade?
• Can you treat a loss limit as a hard line, not a suggestion?
• Are you comfortable with a fee that cannot be refunded once access is granted?

If the answer to any of them is "not yet", practise your plan on a demo account first. A challenge is built around patience and routine, not speed. Nobody can promise that you will pass, and you should be wary of anyone who does.

Key points

• A challenge is a paid evaluation on a simulated (demo) account.
• Two-Step targets are 10% then 5%. The One-Step target is 10%.
• Loss limits are equity-based: 5% and 10% on the Two-Step, 3% and 6% on the One-Step.
• There are 5 minimum trading days in each challenge step.
• Simulated capital has no monetary value. A payout is a discretionary Reward.
• The fee pays for access to an evaluation, not a promise of funding.