Challenge fee
Also known as: prop firm challenge fee, evaluation fee, prop firm fee
Challenge fee: A challenge fee is the price a trader pays a prop firm to take an evaluation (a challenge) with a profit target and loss limits; it pays for a service, is kept by the firm if the challenge fails, and some programmes refund it after a qualifying payout.
What does a prop firm challenge fee cover?
The fee pays for the evaluation: an account, usually simulated, with a profit target and daily and maximum loss limits. It is not a deposit or an investment, and it is not client money. The amount varies by account size and programme, and some firms charge a monthly subscription instead of a one-off fee: prop firm challenge explained.
Is the challenge fee refunded?
It depends on the programme. Some refund the fee in full with the first payout, some in part or with a later payout, and some never refund it. If a rule is broken or the target is not reached, the fee is lost: how do prop firm payouts work?
Worked example
Illustrative only: a trader pays a $500 challenge fee for a $100,000 account and fails on day 3 by breaking the daily loss limit. The trader loses the $500 fee and nothing more; a second attempt costs another fee or a reset.
Sources
Regulatory and official sources
- Is the entry fee refunded?, FTMO
- Refund policy, E8 Markets
Learn more
- Prop Firm Challenge Explained: One-Step, Two-Step and Instant Funding
How a prop firm challenge works: one-step vs two-step evaluations, instant funding, profit targets, drawdown limits, trading days, fees and refunds.
- How Do Prop Firms Make Money? The Prop Firm Business Model
How do prop firms make money? The prop firm business model explained: challenge fees, resets, add-ons, simulated accounts, payouts and conflicts of interest.
- How Do Prop Firm Payouts Work? Profit Split, Timing and Rules
How prop firm payouts work: profit split, payout schedule, first payout timing, payout rules and caps, fee refunds, methods and fees, with firm examples.
Related terms
- Funded account
A funded account is the prop firm account a trader receives after passing a challenge, or directly through instant funding, on which profits are shared under the firm's profit split.
- Payout
A prop firm payout is the payment of a funded trader's share of eligible profits, made by the firm under its profit split and payout rules.
- Simulated account
A simulated account is a trading account that uses fictitious capital and does not execute trades in the real market; many prop firms use simulated accounts for challenges and for funded accounts, and pay real payouts from their own revenue.