Evaluation vs Funded vs Payout Rules in Prop Firms
Prop firms split traders into three phases: evaluation, funded, and payout. Each phase has its own rules, restrictions, and risk systems. The biggest mistake beginners make is assuming the rules stay the same after passing an evaluation. They don’t — and misunderstanding that shift is how traders blow funded accounts in a week.
The Three Prop Firm Phases
| Phase | Main Goal | Risk Level |
|---|---|---|
| Evaluation | Prove discipline & follow rules | Strict |
| Funded | Trade responsibly | Moderate |
| Payout | Generate consistent profits | Monitored heavily |
Each step tightens or loosens different restrictions.
Evaluation Accounts: The Strictest Phase
Evaluation accounts are designed to filter out undisciplined traders. Key rules include:
- Daily loss limit (instant fail)
- Trailing drawdown that moves aggressively
- No holding into news
- Strict scaling rules
- Max contract size limits
- Zero forgiveness for any violation
Evaluations are built to break you if you cut corners.
Funded Accounts: Rules Change Immediately
Your rules change as soon as you pass the evaluation. Funded accounts usually introduce:
- Static drawdown instead of trailing
- Softened news restrictions (some firms lighten them)
- Different scaling rules
- Platform-level risk checks instead of evaluation servers
- Daily loss still enforced, but more forgiving in some firms
A lot of traders fail funded accounts because they still trade like they’re in the evaluation phase. The risk behavior needs to change.
Payout Accounts: The Most Monitored Phase
Payout accounts (also called “Performance Accounts”) are where firms watch you the closest. Here’s what changes:
- Mandatory identity verification
- Payment verification (bank or crypto)
- Trade copier restrictions
- Hedging restrictions — especially in correlated markets
- Consistency rules (payout manipulation prevention)
- Minimum days traded per payout cycle
If a firm suspects you’re exploiting payouts instead of trading responsibly, your account gets flagged fast.
Key Rule Differences by Phase
| Rule Type | Evaluation | Funded | Payout |
|---|---|---|---|
| Drawdown | Trailing | Static or hybrid | Static |
| News Trading | Usually banned | Sometimes allowed | Monitored |
| Scaling | Strict | Moderate | Account-specific |
| Consistency | Light | Higher | Strict |
| Payout Eligibility | None | Limited | Active |
Why Traders Fail Funded Accounts Quickly
The biggest reason traders fail funded accounts is that they keep trading evaluation-style aggression. The evaluation rewards fast gains. The funded phase punishes them.
Examples:
- Oversized trades due to loosened fear
- Misjudging static drawdown buffers
- Trading news out of habit
- Forgetting that payouts require consistency
The psychology shift kills more funded accounts than any rule change.
Payout Rules: The Hidden Trap
Once you hit payout phase, new rules activate automatically:
- Profit share structure
- Minimum active trading days
- Consistency review
- Payout caps per cycle
- Account resets after payout
Some firms reset your trailing drawdown after a payout. Others don’t. This matters.
Final Takeaway
Prop firms change the rules at every phase. Evaluations test discipline. Funded accounts test responsibility. Payout accounts test consistency. If you don’t adjust your trading behavior at each stage, you’ll blow accounts that should’ve paid you for months.