What is evaluation challenge?

What it means

Typical parameters are an 8% to 10% profit target, a 5% daily loss limit and a 10% maximum drawdown, sometimes across two phases with a lower target in the second. Time limits were once universal and many firms have now removed them.

Why it matters

The structure rewards consistency far more than aggression, and this is where most attempts fail. Reaching 10% is not difficult with size; reaching it without ever losing 5% in a day is a different problem, and it is the one the rules are actually testing.

What this changes in practice

For a bot the challenge phase is where risk settings should be at their most conservative, not their most aggressive. Halving the default risk roughly doubles the number of consecutive losses the account can absorb, and surviving the drawdown rule is the binding constraint — see passing a prop firm challenge.