Glossary/Profit Target

Profit Target

Evaluation & Funding
How It Works

Profit targets vary significantly across firms and account sizes, typically ranging from 5% to 10% of the account balance. In 2-step evaluations, Phase 1 usually has a higher target (8-10%) while Phase 2 has a lower target (5%).

The profit target creates a natural tension with drawdown rules. A 10% profit target with only a 5% max drawdown means you need to make twice what you can afford to lose. This asymmetry is intentional -- firms want to fund traders who can generate consistent returns without excessive risk.

There is no time limit to hit the target at most firms (FTMO, FundedNext), but some firms (Apex) require minimum trading days. Once funded, there is typically no profit target -- you trade and keep a percentage of profits.

Real Example with Numbers

FTMO $50K Phase 1: profit target is $5,000 (10%). Phase 2: target is $2,500 (5%). You need to grow the account to $55,000 in Phase 1, then $52,500 in Phase 2. With a 5% daily loss limit ($2,500) and 10% max drawdown ($5,000), you have a 2:1 target-to-drawdown ratio in Phase 1.

Why Profit Target Matters for Prop Firm Traders

Profit Target directly affects whether you pass or fail a prop firm evaluation. Unlike trading your own account where you can recover from mistakes over time, prop firm rules create hard boundaries -- violate them once and you lose your challenge fee and have to start over. Evaluation rules determine the path from paying a challenge fee to receiving funded capital. Getting this wrong means wasted money and time. Many traders cycle through multiple evaluation attempts because they misunderstand these mechanics.

Practical example across firms: FTMO and TopStep handle this differently. FTMO is a 2-step firm with static drawdown and a 5% daily loss limit, starting from €155. TopStep is a 1-step firm with trailing drawdown and a 2% daily loss limit, starting from $49. These structural differences mean your approach to profit target must adapt to whichever firm you choose.

Common mistake: Many traders rush through evaluations trying to hit the profit target as fast as possible. This leads to overleveraging and blowing accounts. The firms with no time limit (most of them) give you the freedom to be patient. Use it. A slow, consistent pass rate beats a fast blowup every time.

Not sure which firm matches your trading style?