Profit Target

The profit target is the minimum percentage gain a trader must achieve on their evaluation account to pass a prop firm challenge phase. This is the fundamental performance benchmark — reach the target within the time limit while respecting drawdown rules, and you advance to the next phase or receive a funded account.

Profit targets vary across firms and phases but follow a consistent industry pattern. Phase 1 targets range from 7-10% at most firms, with 8% being the most common. Phase 2 targets are lower, typically 4-5%, reflecting the verification nature of the second phase. One-step challenges usually set targets between 8-10%, combining both phases into a single higher bar.

The profit target is always calculated as a percentage of the initial account balance, not the current equity. On a $100,000 account with an 8% target, you need to reach $108,000 in closed balance. Unrealized profits on open positions typically don't count toward the target at most firms — you must close the trades and lock in the profit for it to count. Always verify this with your firm, as some count floating profits while others require closed trade P&L only.

The relationship between profit target and drawdown limit defines the "challenge ratio" — a metric that reveals how demanding the evaluation actually is. A firm with 8% target and 10% drawdown has a ratio of 0.8 (favorable). A firm with 10% target and 8% drawdown has a ratio of 1.25 (demanding). The lower the ratio, the more room you have to reach the target without the drawdown limit being a primary concern.

Profit targets also interact with your risk management in a mathematical way that most traders don't appreciate. On a $100K account needing 8% with 1% risk per trade and 1:2 R:R, the expected number of trades to reach the target (assuming 50% win rate) is: 8,000 ÷ ((0.5 × 2,000) - (0.5 × 1,000)) = 8,000 ÷ 500 = 16 trades. At 1-2 trades per day, that's 8-16 trading days — well within a 30-day limit. This calculation should be your starting point for determining whether a challenge's profit target is realistic for your strategy.

The profit target determines your entire challenge strategy. Every decision — position sizing, trade frequency, risk-reward targets, and daily profit goals — flows from this number. Setting your daily and weekly targets as fractions of the total profit target ensures you're on track without overextending on any single day.

Comparing profit targets across firms reveals significant value differences. FTMO requires 10% in Phase 1, while some competitors require only 7-8% for similar account sizes and drawdown limits. That 2-3% difference might not sound significant, but it translates to 20-30% more profit needed — which can mean the difference between passing in 3 weeks versus running out of time.

Always compare the profit target RELATIVE to drawdown limits, not in isolation. An 8% target with 5% daily drawdown is much harder than a 10% target with no daily drawdown limit, even though the absolute target is lower.