Quick Facts: Funding Pips Rules
Profit Target: Usually 8% for Phase 1 and 5% for Phase 2 (varies slightly by account type).
Daily Drawdown: Strict 5% daily loss limit based on balance or equity.
Maximum Drawdown: 10% maximum overall loss limit.
Minimum Trading Days: Zero minimum trading days required to pass.
Bonus Tip: You can get a discount on your challenge fee by applying promo code 2886388A at the checkout screen.
Passing a proprietary trading firm challenge is not just about making good trades; it is entirely about understanding and respecting the risk parameters. When I first attempted a prop firm challenge, I failed within three days simply because I did not understand how the daily loss limit was calculated. Before you buy an evaluation, you must thoroughly understand the specific Funding Pips rules.
In this guide, I will break down exactly how the Funding Pips rules work, how the Funding Pips drawdown is calculated, and the profit targets you need to hit to get funded.
The Core Funding Pips Rules: Profit Targets
The evaluation process is typically split into two phases to prove you are a consistent trader. The Funding Pips rules regarding profit targets are very straightforward.
In Phase 1 (The Challenge), you are usually required to hit an 8% profit target. If you are trading a $100,000 account, you need to make $8,000 in simulated profit. In Phase 2 (The Verification), the target drops to 5%. For a $100,000 account, you only need to make $5,000.
The best part about the Funding Pips rules is that there are no time limits. You can take three days or three months to hit these targets. There are also zero minimum trading days required. If you hit the target on day one, you pass the phase immediately.
Understanding the Funding Pips Drawdown Limits
This is where 90% of traders fail. You must understand the Funding Pips drawdown mechanics perfectly to survive.
The 5% Daily Drawdown: The most critical of all Funding Pips rules is the 5% daily loss limit. This is calculated based on your starting balance or equity at the beginning of the new daily trading cycle (usually 5 PM EST). If your account drops by 5% at any point during that 24-hour period, you breach the account.
The 10% Maximum Drawdown: The overall Funding Pips drawdown limit is 10%. This is a static limit based on your initial account balance. If you have a $100,000 account, your account equity can never drop below $90,000 at any point. Even if you are up $5,000 in profit, your hard lower limit remains $90,000.
My Drawdown Math Example
Let me show you exactly how the daily Funding Pips drawdown calculation works in a real trading scenario.
Assume you have a $100,000 account.
On Monday, you make $2,000 in profit. Your new balance at the end of the day is $102,000.
When Tuesday starts (the new daily cycle), your 5% daily loss limit is calculated on that $102,000.
5% of $102,000 is $5,100.
Therefore, on Tuesday, your account equity cannot drop below $96,900 ($102,000 - $5,100).
If you take a trade on Tuesday that floats in a loss of $5,101, your account will be immediately breached, even if you do not close the trade.
Watch Out: The daily Funding Pips drawdown includes floating losses (open trades), not just closed positions. If your open trade hits the 5% limit for even one second, you fail the challenge. Always use a hard stop loss.
Prohibited Trading Strategies
While they are flexible, the Funding Pips rules do prohibit certain toxic trading behaviors. You cannot use high-frequency trading (HFT) bots, arbitrage strategies, or tick scalping. They want to fund traders who execute manual, logical strategies. News trading is generally allowed, but you should always verify the latest terms of service on their dashboard regarding holding trades over the weekend.
Saving Money on Your Challenge
Because prop trading is difficult and you might fail a challenge while learning the Funding Pips rules, you should never pay full price for an account.
You can apply the promo code 2886388A at checkout to get a direct discount on your evaluation fee. This keeps your upfront costs low while you master the Funding Pips drawdown limits and build your trading consistency.
Frequently Asked Questions (FAQ)
Q: What is the maximum Funding Pips drawdown allowed?
The maximum overall drawdown limit is 10% of your initial starting balance.
Q: How is the daily Funding Pips drawdown calculated?
The 5% daily loss limit is calculated based on your balance or equity (whichever is higher) at the start of the new daily trading cycle.
Q: Are there any time limits to pass the challenge?
No. There are no maximum time limits. You can take as long as you need to hit the profit targets.
Q: Are there minimum trading days required?
No. The Funding Pips rules state there are zero minimum trading days required to pass either phase.
Q: Does the drawdown limit include floating losses?
Yes. The drawdown limits account for floating equity, meaning open trades that go into deep negative territory can breach your account.
Q: Is news trading allowed?
Yes, news trading is generally allowed, but you should review the specific terms for your account size and type.
Q: Can I use automated trading bots (EAs)?
Standard EAs that execute normal strategies are allowed, but toxic bots (HFT, arbitrage) are strictly prohibited by the Funding Pips rules.
Q: How can I get a discount on the evaluation fee?
You can use the promo code 2886388A on the payment page to receive an instant discount on your challenge purchase.