A prop-firm evaluation plan with risk rules and a trading-business budget on paper

What you will learn

• How to write a one-page evaluation plan that fixes account, risk per trade, daily stop and attempts budget before you pay a fee.
• How to turn a payout into a tax reserve, a retirement line and spendable income in one step.
• How to set decision gates that tell you when to continue, pause or stop the project.
• How to review the plan quarterly with three numbers.

Explanation

Each earlier lesson produced one building block, from the economics of evaluations (lesson 1) to legal form (lesson 12). The capstone is a single written document with five sections. Write it before paying the next fee; a plan written after a failed attempt is usually a rationalisation.

Section 1: Firm and account

Name the firm, account size, drawdown type, daily loss limit, profit target, consistency rule, news rule and payout terms (split, waiting period, caps), with the date and version of the terms you read. Add the lesson 6 counterparty checklist result: register entry, payment methods, complaint history, data-feed source. If any item is unresolved, the plan ends here.

Section 2: Risk rules

Derive the rules from the drawdown, not from a feeling: risk per trade as a percentage of the starting balance; maximum losing trades per day, which sets a personal daily stop well inside the firm's limit; maximum open positions; a no-trading rule for the day after a maximum-loss day; and a sizing rule that keeps every day below the consistency threshold. Numbers, no adjectives.

Section 3: Attempts budget and pass expectation

Fix the maximum number of paid attempts for the next twelve months and the fee budget, funded outside the lesson 11 reserve. Estimate the pass probability per attempt from your own journal, not from marketing; without data assume a low figure. The probability of at least one pass is 1 − (1 − p)^n, where p is the pass probability and n the number of attempts; accept that no pass is a realistic outcome.

Section 4: Payout plan

Fix what happens to every payout: euro conversion on the day of receipt, an invoice and an EÜR line (lesson 10), a fixed tax reserve share, a fixed retirement share, the rest to the household or reserve. Fix the first-payout policy: many traders take the earliest small payout to confirm that the firm pays and to recover the fee, then build a buffer in the account.

Section 5: Business budget and decision gates

Copy the lesson 11 cost table, reserve target and required gross payout. Then write three gates: a continue gate (for example two payouts and a median above a threshold), a pause gate (attempts budget spent, or three rule breaches in a month) and a stop gate (reserve below three months, or twelve months without the median reaching a set fraction of the requirement). Gates set in advance protect you from the sunk-cost feeling.

Quarterly review

Each quarter record fees paid versus payouts received in euros (business or hobby?), the median monthly payout over twelve months (can it carry you?) and rule breaches per 100 trades (strategy or discipline?).

Worked example

Hypothetical example: Plan for a $100,000 futures-style account with a static 10 percent maximum drawdown, a 5 percent daily loss limit, an 8 percent profit target, a 40 percent consistency rule and an 80 percent profit split. Fee €450 per attempt. The trader's journal shows a pass probability of about 35 percent per attempt. Exchange rate assumed at 1.10 US dollars per euro. Spreads, commissions and slippage are ignored.

1. Risk per trade: 0.5 percent of $100,000 = $500. Personal daily stop: three losing trades = $1,500, which is 1.5 percent, well inside the 5 percent firm limit and 15 percent of the total drawdown.
2. Consistency: to pass with $8,000, no single day may exceed 40 percent, so the daily profit cap is 0.40 × 8,000 = $3,200; the trader stops for the day at $2,500 to keep a margin.
3. Attempts budget: maximum 3 attempts, 3 × €450 = €1,350. Probability of at least one pass: 1 − 0.65³ = 1 − 0.2746 = 72.5 percent; probability of losing the whole budget without a pass: 27.5 percent.
4. First payout: after reaching $4,000 of funded profit, 80 percent split = $3,200; at 1.10 this is 3,200 ÷ 1.10 = €2,909.09.
5. Split of the payout: tax reserve 30 percent = €872.73; retirement 10 percent = €290.91; remainder 60 percent = €1,745.45 to the household.
6. Gates: continue if two payouts arrive within six months of funding; pause when the €1,350 is spent or after three rule breaches in a month; stop if the reserve falls below three months of costs.

Common mistake

Practice activity

On paper: write your own plan with these numbers. Account $50,000, daily loss limit 4 percent, maximum drawdown 8 percent, profit target 6 percent, consistency rule 30 percent, fee €300, your estimated pass probability 25 percent, maximum 4 attempts, exchange rate 1.10. Calculate (a) risk per trade at 0.5 percent and the personal daily stop at three losers, (b) the daily profit cap under the consistency rule, (c) the attempts budget and the probability of at least one pass, (d) the euro amount of a first payout of $2,500 at an 80 percent split, and the household share after 30 percent tax reserve and 10 percent retirement.

Key takeaways

• The plan has five sections: firm and account, risk rules in numbers, a capped attempts budget with a pass expectation, a payout split and a business budget with decision gates.
• Derive risk per trade and the daily stop from the drawdown and the consistency rule, not from ambition.
• Split every payout mechanically into tax reserve, retirement and household money on the day it arrives.
• Continue, pause and stop gates written in advance are the only protection against the sunk-cost trap of repeated evaluations.

Next step

Prop firms live in a market full of unregulated offers; continue with the course "Fraud, Scams & Investor Protection" to learn how to check any offer before you pay and what to do if something goes wrong.