Evaluation/Challenges can come in several forms including private prop firm capital or principle only. Unlike traditional prop firms that primarily cater to professional traders and institutional investors, retail prop firms focus on providing retail traders access to challenges/evaluations and other support services.

Challenge/Evaluation firms typically operate on a business model where they allocate simulated capital, backed by the firm, to the individuals. These individuals, also referred to as "Data Analysts", use the simulated capital to engage in analytical trading activities across various financial markets within CFDs such as, Indices, Commodities, Equities and/or FX (Forex).
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The key attributes of an Evaluation firm include:
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1. Capital Allocation: Evaluation firms provide individuals with prop-backed simulated capital, allowing them to provide analysis, execute trades and potentially gain from the financial markets. The allocation typically utilises leverage, therefore allowing the individuals to trade with larger capital.
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2. Reduced Risk: Evaluation firms often absorb a significant portion of the trading risk, protecting their Risk Analysts from substantial losses beyond a certain threshold. This risk-sharing arrangement enables the individuals to focus on their analytical edge without being exposed to margin calls and further financial risks.
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3. Support and Resources: Evaluation firms offer various resources and support services, including trading platforms, market data, research tools and educational material(s). These resources are designed to enhance the individuals' skills, knowledge, and overall performance.
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4. Gain-Sharing or Commission Structure: In return for providing simulated capital and resources, Evaluation firms typically adopt gain-sharing or commission structure. Analysts receive a percentage of the gains generated from their activities, while the firm retains a portion as compensation for providing the capital and support.
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Overall, Evaluation firms act as an incubator for retail professionals and aims to bridge the gap between individual retail professionals and the opportunities available in the financial markets.