The real odds of passing a prop challenge with no edge
Educational only, not financial advice. Simulations and backtests are models, not promises. Check every rule with your own firm.
Suppose your trading has no edge at all. What are your odds of passing a challenge? Surprisingly high on paper, around 35–50% for common rules. Then costs, trailing drawdowns and time limits take most of that away.
The one formula to know
Treat your account as a fair game: on average each trade makes zero. You stop when equity reaches the target +T or the max loss −D. Because the expected final value of a fair game equals the start (the optional stopping theorem), we need
P(pass) × T − (1 − P(pass)) × D = 0
⇒ P(pass) = D ÷ (T + D)
That holds for any strategy, sizing or exit, as long as there are no costs and nothing else ends the game: no daily limit, no deadline, no trailing. It’s the classic gambler’s-ruin result.
What that gives for real rules (before costs)
| Program (rules from the firm’s site) | Target / max loss | Zero-edge pass |
|---|---|---|
| Lark Funding 1-Step | 10% / 7% static | 41.2% |
| FTMO 2-Step (two phases) | 10% then 5% / 10% static | 50% × 66.7% = 33.3% |
| FundedNext Stellar 2-Step | 8% then 5% / 10% static | 55.6% × 66.7% = 37.0% |
| FundedNext Stellar 1-Step | 10% / 6% static | 37.5% |
| Topstep 50K Combine | $3,000 / $2,000 trailing | below 40% (trailing) |
Rules as listed on each firm’s pages; see the rules comparison for sources and the date checked.
That’s why challenges can look like a coin flip. A zero-edge trader "passes" a third or more of the time, and that’s exactly why many traders think they have an edge after one pass.
Now add costs
Real trades pay spread and commission. In R units, cost per trade is about spread ÷ stop. Once each trade loses a little on average, the number of trades you take starts to matter, and smaller risk means more trades. Simulated with the pass-odds calculator (50% win rate, 1:1, up to 2 trades a day, no time limit):
| Lark 1-Step rules (10% / 7% / 5% daily) | 0.25% risk | 0.5% risk | 1% risk | 2% risk |
|---|---|---|---|---|
| No costs | 41.0% | 41.1% | 40.9% | 43.8% |
| Costs 0.05R | 1.6% | 9.9% | 22.1% | 30.9% |
| Costs 0.10R | 0.0% | 1.5% | 9.9% | 21.6% |
(The 2% no-cost figure is a bit above 41% because a 7% drawdown isn’t a whole number of 2% steps: the account is only ruined after four losses, at −8%.)
For FTMO’s 2-Step at 1% risk and 0.05R costs, phase 1 passes about 26% and phase 2 about 47%, so about 12% get through both. FundedNext’s Stellar 2-Step comes out at about 33% × 48% ≈ 16% under the same assumptions.
Trailing drawdowns and time limits cut it further
- Trailing drawdown: the floor follows your best balance up, so gains you give back still count against you. With a 6% target and a 4% max loss at 0.5% risk and 0.05R costs, a static limit passes about 19%. An end-of-day trailing limit that locks at the starting balance (Topstep-style) passes about 13%.
- Time limits: if you can only trade once a day for 30 days, 0.5% risk almost never reaches 10% in time (0% pass, 98% out of time), while 2% risk passes about 23%.
- Daily limits that fail the account add a second way to lose, unless you stop trading for the day before you can hit them.
What the research says
The only paper we found that prices challenges directly is a 2026 working paper (Lim, not peer-reviewed). It models a two-step challenge as a first-passage problem: a zero-edge trader passes the frictionless version 50% of the time but the realistic contract only about 30%, because time limits and similar rules tilt the game to the firm. With transaction costs it values a $500 challenge at about $221 on average, and about 7.5% of buyers reach funded status.
Real-world trading records point the same way. Among about 450,000 Taiwanese day traders a year, fewer than 1% were predictably profitable after fees (Barber et al. 2014). In Brazilian index futures, 97% of people who day traded for more than 300 days lost money (Chague et al., working paper).
What it means for you
- A pass isn’t proof of an edge. With no edge you’d still pass about a third of the time on many programs. Judge your edge on hundreds of trades, after costs.
- Costs are the silent killer. Tight stops plus spread can turn 40% odds into single digits. Measure your average cost in R.
- Passing isn’t getting paid. Funded accounts keep the drawdown rules, and the edge you need to keep one is the same edge you needed to pass.
- If you have no edge, fewer, larger trades within the rules give the best odds. That’s bold play, with its own caveats.
Sources
- Williams, D. (1991). Probability with Martingales. Cambridge University Press. [Book]
- Dubins, L. E. & Savage, L. J. (1965). How to Gamble If You Must. McGraw-Hill. [Book]
- Lim (2026). The price of a funded account: An actuarial analysis of proprietary trading firm challenges. SSRN. doi:10.2139/ssrn.7178078 [Working paper, not peer-reviewed]
- Lutsak (2026). The economics of proprietary trading firm challenge models. SSRN. doi:10.2139/ssrn.6814738 [Working paper, not peer-reviewed]
- Barber, B. M., Lee, Y.-T., Liu, Y.-J. & Odean, T. (2014). The cross-section of speculator skill: Evidence from day trading. Journal of Financial Markets 18, 1–24. doi:10.1016/j.finmar.2013.05.006 [Peer-reviewed]
- Chague, F., De-Losso, R. & Giovannetti, B. (2019). Day trading for a living? SSRN. doi:10.2139/ssrn.3423101 [Working paper, not peer-reviewed]
- Browne, S. (1999). Reaching goals by a deadline: Digital options and continuous-time active portfolio management. Advances in Applied Probability 31(2), 551–577. doi:10.1239/aap/1029955147 [Peer-reviewed]
"Peer-reviewed" means published in a refereed journal. Working papers and books aren’t peer-reviewed. Figures from "our own tests" are our backtests and simulations, not peer-reviewed research.