Every funded-trading firm sells the same promise: trade our capital, keep a share of what you make. The promise is simple. The mechanism behind it is not, and most traders never look past the marketing page to see how it actually works.
That is a mistake. The mechanism is what determines your real exposure — not the headline split, not the account size on the pricing card. A funded account moves through distinct stages. Each stage changes who is carrying the risk, what counts as your capital, and what happens the moment a limit gets touched. Understanding that sequence tells you more than any comparison table.
Key Takeaways
- A funded account is reached through an evaluation, not purchased outright — the fee buys an attempt, not the capital itself.
- During evaluation, your trading happens in a simulated environment; only your challenge fee is real money at risk.
- Loss limits are typically measured against equity, not balance, so an open position can trigger a breach before you close it.
- Consistency-style rules exist to test whether your result is repeatable, not to punish a single good day.
- Passing an evaluation does not end the rules — it removes the profit target and starts the payout clock.
The three stages, and what changes between them
Strip the marketing away, and a funded-trading program is built from up to three stages, and every rule in the document attaches to one of them.
Evaluation is the first and only stage where you are being tested rather than paid. You pay a fee once, trade inside a simulated account built to mirror a real one, and try to hit a profit target while staying inside a set of loss limits. Nothing you make here is withdrawable — the evaluation is not measuring your profit, it is measuring whether your process survives contact with real conditions.
Some programs split this into two stages instead of one, adding a second evaluation — often called Verification — after the first. The logic is simple. A single pass can be one good week from a trader who got lucky. A second pass, taken after the luck has had time to run out, is harder to fake. A one-stage structure trades that second sample for speed. You clear the bar once, at a higher target, instead of twice at two lower ones.
Funded is the stage everything else was built to reach. The profit target disappears — there is nothing left to prove — but the loss limits that protected the firm's capital during evaluation generally stay in force. You are now trading a real, funded account, and what you earn on it is real profit rather than a passed test.
The through-line worth holding onto: the stages are not three unrelated products. They are one funnel, and the loss limits are close to the only rule that survives the whole way through it.
What "simulated" actually means, and where it stops
This is the distinction traders confuse most often, and it is worth being precise about, because the two halves of a funded-account program run on genuinely different capital.
During evaluation, you are trading in a simulated environment that mirrors live market conditions: real prices, real spreads, real execution behavior. No real capital changes hands on your trades. What is real during this stage is narrower than it looks: your challenge fee. That is the one number you can actually lose. A breached evaluation does not generate a bill, a margin call, or a debt. It ends the attempt, and the fee is gone.
Once you pass and move to a funded account, that boundary moves. You are no longer trading a simulation. You are trading against the firm's own balance sheet, and the profit or loss you generate is the firm's real profit or loss before your split is applied. The rules that governed your simulated account — the loss limits, mainly — usually carry over unchanged. The firm's real capital now needs exactly the same protection the simulated exercise was rehearsing.
Conflating the two stages is the single costliest misreading in this category. Treating your funded account like an extension of the evaluation — where the worst case was a lost fee — ignores that the worst case has changed shape entirely: a breach on a funded account does not cost you a fee, it ends your access to that capital and the profit split you were building toward.
Loss limits: the rule that decides almost everything
If a rulebook has one section worth reading twice, it is this one. Two design choices inside it matter more than the headline percentage.
The first is what the limit is measured against. A limit measured on balance only counts positions once they are closed. An open drawdown does not touch it. A limit measured on equity counts your open positions too, in real time. Under an equity-based limit, a position you have every intention of holding through a dip can trigger a breach before you get the chance to close it. That single distinction changes how you should size a position.
The second is whether the limit is anchored or trailing. An anchored limit is fixed against your starting balance and never moves. A trailing limit follows your equity upward once you are in profit, which raises the floor under a winning account at the same time as it protects the gains that raised it. At Carrot, the Maximum Daily Loss on the 1-Phase Challenge is set at onePhase: '4% of equity', recalculated every day at 00:00:00 UTC — and because the venue trades around the clock, that reset lands mid-session for anyone whose day does not start at midnight UTC. Equity = Balance + Unrealized P&L., and the daily limit is written against that figure, not the closed-trade balance.
Whichever combination a program uses, the arithmetic behind a breach is unforgiving by design. It is meant to be — a loss limit that could be argued with would not protect anything.
Why firms measure repeatability, not just the number
A profit target answers one question: can you produce a return at all? It is also the easiest rule to satisfy by accident, because a single lucky trade clears it exactly as well as a disciplined process does.
That is the gap a consistency-style rule is built to close. The mechanic behind most versions is a ratio, not a threshold on any single trade: take your total profit, remove your best single day, and check how much of the result survives without it. Carrot's version is the Best Day Rule. The rulebook publishes the calculation itself — (Total Profits - Best Day Profit) / Total Profits x 100 — and states plainly that it applies only to the structure that samples you once: Applies to 1-Phase Challenge only. Not applicable to 2-Phase Challenge. A two-stage evaluation already gets its repeatability evidence from the second stage, so it does not need a second instrument measuring the same thing.
The part worth knowing before you plan for any consistency rule is what happens the moment you fall short of it. It is usually a gate, not an ending: falling short does not fail the evaluation on its own, it holds you where you are until ordinary trading days dilute the one outsized day that pulled the ratio down.
What a payout actually requires
Passing the evaluation and getting paid are two separate milestones, and the gap between them is where a program's real posture toward traders shows up.
Payouts are not owed on a fixed calendar — most funded programs, Carrot included, run on-demand: label: 'Frequency', value: 'On-demand', note: 'At any time, once eligible'. Eligibility, not a date, is the gate. Underneath that, there is usually a floor: Carrot sets a Minimum Payout of '100 USDC' per request, so a request has to clear that bar before it can be submitted at all.
The mechanics of the request itself are worth checking too. Some programs allow partial withdrawals. Carrot does not — a request is 'Full amount only — no partial payouts.' You are choosing between taking everything currently available or waiting for more to accumulate, not skimming off a portion. And crossing into a funded account does not erase the account you built during evaluation: Upon passing the Challenge, you receive a funded account with the same starting balance. The core risk management rules remain in place, but profit targets are removed and payouts become available. The risk framework keeps running underneath the payout mechanism now layered on top of it.
One more detail that catches traders by surprise: the aggregate ceiling. A funded trader is not free to scale a single account without limit — Carrot caps combined funded balances at up to an aggregate balance of $200,000, and requests beyond that move into a separate review process rather than an automatic top-up.
What varies most between programs
Once you have the stage structure and the loss-limit mechanics down, most of the remaining differences between funded-account providers reduce to a short list:
- Whether the loss limit reads on equity or on balance, and whether it is anchored or trailing.
- Whether the profit target is split across two stages or asked for once, in a single larger jump.
- Whether a consistency-style rule exists at all, and whether it applies to every route or only some.
- What is restricted outside the numbers — a time limit, a minimum number of trading days, a holding-period rule, a blackout around news. Carrot's own position here is a flat one:
No time restrictions, no trading style limitations, no artificial barriers. - Whether you can run multiple evaluations simultaneously. Carrot places no ceiling on this either:
There is no limit to how many challenge accounts you can hold or pass.
None of these differences is inherently better or worse in the abstract. They are trade-offs a firm makes on your behalf, and the only way to know which trade-offs you are accepting is to read past the pricing card into the rulebook underneath it.
A five-question check before you read any rulebook
Whatever program you are looking at, five questions tell you almost everything the pricing page leaves out:
- Is the loss limit measured on equity or on balance, and does that change what an open position can do to it?
- Is the overall limit anchored to your starting balance, or does it trail your equity upward?
- Does a consistency-style rule exist, and does it end the evaluation or just hold your progress?
- What happens to the rulebook the moment you pass — do the loss limits carry over, or does something new take their place?
- Is a payout gated by eligibility, or by a calendar you have no control over?
Answer those five, and a rulebook stops reading like a wall of numbers and starts reading like what it actually is: a description of who is holding the risk, at every point along the way.
Carrot documents the route through these stages in one place rather than scattering it across a pricing page and a support article: the full parameter set for both routes is in the CarrotFunding Rulebook, and the step-by-step process from evaluation to a funded account is documented in how the challenge process works. If the loss-limit distinctions in this piece are new to you, we cover one of the loss-management tools traders lean on most in stop-loss orders: types, placement logic, and common mistakes.
Fazit
A funded account is not one product with one number attached to it. It is a sequence of stages, and the risk changes hands at every transition. Evaluation puts your fee at risk against a simulated account. A funded stage puts the firm's real capital at risk against loss limits that, in most programs, barely change from the ones you just cleared. The percentage on the pricing card tells you almost nothing about that sequence. The rulebook underneath it tells you everything. Read it once, carefully, before you fund the fee that starts the clock.
FAQ
Is money lost during a failed evaluation the firm's money or mine?
Only your challenge fee is at risk during an evaluation. The trading itself happens in a simulated account, so a breach ends the attempt and the fee you already paid — it does not create a bill or a margin call, because no real capital of yours was ever exposed to the trades.
Do the loss limits change once I get a funded account?
Generally no. The stage that changes at funding is the profit target, which is removed once you pass — profit targets are removed and payouts become available — but the core risk-management rules, including the loss limits, are stated to remain in place on the funded account.
Why do some programs split the evaluation into two phases instead of one?
A single pass can be produced by one lucky trade as easily as by a repeatable process. A second phase, cleared after the first, is a second sample of the same trader — harder to produce by luck alone. A one-phase structure trades that second sample for a faster route to funding, usually by asking for a larger profit target in the single phase it keeps.
Does an equity-based loss limit only matter while I'm actively trading?
No, and that is the part traders most often miss. An equity-based limit includes your open, unrealized positions, so it can move — and in principle trigger a breach — while you are away from the screen and a position is simply sitting open against the market.
If my best day is unusually large, does that automatically fail the evaluation?
Not under a consistency-style rule built as a ratio. Falling short of the threshold typically gates further progress rather than ending the evaluation outright — trading continues, and every additional ordinary day makes the one outsized day a smaller share of the total, which is exactly what the rule is designed to measure.
