Most traders who fail a prop firm challenge do not fail because of a bad strategy. They fail because they do not understand the rules of the specific program they signed up for, or they apply the right habits at the wrong moment. This guide is not a general overview of prop trading. It covers Funded7’s five challenges specifically, so you can walk in knowing exactly what you are being tested on.
First, Pick the Right Funded7 Challenge for You
Funded7 runs five distinct programs and each one is designed for a different type of trader. Choosing the wrong one is one of the most common and most avoidable mistakes, so it is worth spending five minutes here before spending money on a challenge.
The Two Phase is the most popular option. It runs a two-step evaluation where Phase 1 requires an 8% profit target and Phase 2 requires 6%. The max daily loss is 5% and the max total drawdown is 10%, both calculated on a static basis from your opening balance. You can scale up to $500,000 in capital, keep 80% of profits, and access leverage up to 1:50 on FX majors on MT5. It is available on both MT5 and cTrader.
The Two Phase NEO shares the same profit targets, drawdown rules (5% daily, 10% total static), and 80/20 payout split as the standard Two Phase. It is designed for traders who want the two-phase structure with a more refined account environment. Account sizes run from $15k to $500k across both platforms.
The One Phase compresses everything into a single evaluation with a 10% profit target. The drawdown rules are tighter: a 4% daily loss limit and 8% max total loss, both on a trailing basis. Trailing drawdown moves up with your equity peak, which means early profits can reduce your safety buffer if you give them back. The profit split starts at 50/50, upgradable via add-ons, and account sizes run from $15,000 to $200,000.
The PAYG (Pay as You Grow) runs two phases with the same 8%/6% targets but changes the payment model: you only pay the next phase fee after passing the current one. On a $500,000 account, the Phase 1 entry fee is roughly 22% of the total cost. Fail Phase 1 and you lose that fraction, not the full amount. The drawdown rules are 4% daily and 8% total, both static. MT5 only, with an 80/20 profit split.
The Instant Funding skips the evaluation entirely. You pay once and trade with Funded7 capital from day one. Rules still apply: 5% daily loss limit, 8% max total loss on a trailing basis, and a 50/50 profit split. Available on MT5 and cTrader, with account sizes from $5,000 to $75,000. This is for experienced traders who have already proven themselves and want to bypass the evaluation process.
All five programs share the same constants: a minimum of 3 trading days, a minimum of 10 closed trades, no maximum trading period, payouts processed within 1 business day, and a $100 minimum withdrawal.
Understand What Funded7 Is Actually Testing
The rules are not arbitrary. They are designed to identify one specific type of trader: someone who can generate returns consistently without taking reckless risks. Funded7 is not looking for a 10-day miracle. It is looking for behavior that could scale to a $500,000 funded account, and the evaluation is the filter that confirms whether your approach is durable enough to trust with real capital.
The two numbers that end most challenges early are the daily loss limit and the total drawdown cap. Understanding how these are calculated in your chosen program matters more than your win rate, because a great strategy sized incorrectly will breach a drawdown limit before it ever gets the chance to prove itself.
Static vs Trailing Drawdown
Static drawdown is used by Two Phase, Two Phase NEO, and PAYG. The floor is calculated from your opening balance and does not move regardless of how much profit you make. On a $100,000 Two Phase account, the 10% total loss limit stays fixed at $90,000 even if your account grows to $112,000. That means a profitable run does not shrink your buffer, which gives you a stable and predictable floor to size against.
Trailing drawdown is used by One Phase and Instant Funding. The floor follows your equity peak upward. If your One Phase $100,000 account equity reaches $106,000, your floor moves to $97,520 (8% below that peak). If you then give back those gains and drop to $97,000, you have breached the limit even though you are only 3% below your starting balance. Trailing drawdown rewards protecting profits above everything else, and punishes strategies that build quickly then pull back.
Switching between challenge types without understanding this difference leads directly to breaches that feel unfair but are clearly defined in the rules. Make this decision deliberately before you start.
The Prohibited Practices That End Challenges
Every Funded7 program bans the same set of strategies and monitors for them systematically. Violations result in disqualification, not a warning, so it is worth knowing exactly what is on the list before you trade a single position.
Hedging is not allowed. Running opposing positions on the same instrument to reduce exposure or lock in a result is a breach, regardless of the intent behind it. High-frequency trading and tick scalping are prohibited — if your strategy relies on submitting dozens to hundreds of very short-duration trades per session to exploit quote latency, it is not compatible with any Funded7 program. Martingale-style approaches are banned, meaning you cannot increase position size after losing trades to recover previous drawdowns faster. Copy trading and reverse copy trading are prohibited in both directions, whether you are the source account or the mirror. Arbitrage and latency exploitation are not allowed, including any strategy that exploits price differences between Funded7’s data feed and another source.
The traders who hit these rules are often not trying to cheat. They are using strategies that worked in a retail brokerage environment where these practices were either permitted or not monitored. If you are unsure whether your approach falls into any of these categories, read the full prohibited practices section before purchasing any challenge.
Practical Steps for Each Phase
Before You Start
Read the rules for your chosen program on the Challenge Comparison page and convert your limits into dollar figures, not percentages. On a $100,000 Two Phase account that means: daily limit is $5,000, total drawdown buffer is $10,000, and the Phase 1 profit target is $8,000. Working in dollars during the challenge rather than percentages makes the constraints real and immediate. Also use Funded7’s free trial to trade your actual strategy on a demo account for at least one week before committing any money.
Phase 1
The goal of Phase 1 is to reach the profit target without breaching either drawdown limit. There is no time limit on any Funded7 challenge, so there is no structural reason to rush. Keep risk per trade between 0.5% and 1% of account balance. At 1% risk per trade on a $100,000 account with an average 1:1 reward-to-risk ratio, you need 8 net winning trades to hit the Two Phase Phase 1 target. At 1:2, you need fewer. Calculate this number before you open your first position and use it to pace your trading across sessions rather than chasing the target in a single week.
The minimum of 10 closed trades is a hard requirement and does not get waived. Do not trade on days without a clear setup. A session with no trades costs nothing. A session where you force an entry and hit your daily loss limit costs the entire day’s buffer and puts real pressure on your total drawdown.
Phase 2 (Two Phase, Two Phase NEO, PAYG Only)
Phase 2 has a lower profit target than Phase 1 (6% vs 8%), but a disproportionate number of traders fail here after becoming overconfident from passing Phase 1. The rules are identical. The daily limits are the same. The minimum trading days requirement resets to 3. Treat Phase 2 exactly as if Phase 1 never happened, with the same position sizes and the same willingness to wait for the right setup.
The Funded Phase
Once funded, the same drawdown rules that governed your evaluation apply to your live account. Payouts are available every 7 days, processed within 1 business day. Minimum withdrawal is $100, with bank transfer and crypto both available. The funded phase is covered in more detail in the article on surviving your first month as a funded trader.
Choosing Your Platform: MT5 or cTrader
This is a meaningful decision, not a cosmetic one, and it affects both your leverage limits and your toolset.
Choose MT5 if you trade with Expert Advisors, use custom indicators, or rely on multi-timeframe analysis in a single interface. All five Funded7 challenges support MT5. Leverage on FX majors runs up to 1:50 on Two Phase, Two Phase NEO, and Instant Funding, and 1:30 on One Phase and PAYG. If your strategy is built in MQL5, this is the only viable choice since there is no conversion path to cTrader’s cAlgo environment.
Choose cTrader if you are a discretionary trader who values execution quality, full market depth visibility, and precise order management. cTrader is available on Two Phase, Two Phase NEO, One Phase, and Instant Funding, but not on PAYG. Note that leverage on cTrader for FX exotics is lower (1:10 vs 1:30 on MT5), which matters if exotic pairs are part of your regular setup.
Know Your Numbers Before You Buy
None of the above matters if you do not know your strategy’s actual edge going in. Before spending money on a challenge, you need to be able to answer three specific questions: What is my average win rate over the last 100 trades? What is my average reward-to-risk ratio? And how many consecutive losing trades can my strategy produce without breaching the daily loss limit on the challenge I am considering?
If you cannot answer all three, do not buy a challenge yet. Use the free trial, build your trade log across at least two weeks of live market conditions, and come back when the numbers are clear. Funded7’s five programs give every type of trader a viable path to funding, but only if the strategy behind the attempt has been tested enough to know what it actually does under pressure.
