If you've ever waded into the arena of prop trading, you're already well aware that there's a huge difference between discussing trading and doing it with your own capital on the line — or in this instance, a prop firm's capital. And when your instrument of choice is the S&P 500 futures (the ES), well… let's just say that the game has its own nuances.
It's not that the S&P is this elusive creature — after all, thousands of traders all over the world make trades against it every day — it's that prop firm assessments constructed around the ES have certain barriers that can seem like they're waiting to catch you out before you even leave the gate.
So let's get down to it. We'll discuss why the ES is so desirable to prop firms, the pitfalls that traders fall into, and how you can survive those evaluation phases without losing your hair.
Why S&P Futures Are the Darling of Prop Firm Evaluations
First, before we dive into the "challenges" section, let's cover the obvious: why S&P 500 futures appear on nearly every prop firm's roster of tradable product offerings.
Liquidity like you wouldn't believe
The ES contract is one of the most liquid instruments in the world. There’s almost always someone on the other side of your trade, which means tight spreads and quick fills. Prop firms love this because it makes risk management easier on their end.
Volatility that moves the needle
The S&P provides sufficient daily range to offer traders multiple chances without being as volatile as, for example, natural gas or crude oil. This equilibrium of movement and predictability is a goldilocks area for evaluation programs.
Clean correlation to overall market sentiment
The ES is not a standalone entity — it's the pulse of U.S. equity markets. That means a trader can employ an assortment of analysis tools (technical, fundamental, macroeconomic) and still have an edge.
Ease of scaling positions
You can scale up from trading a single micro contract to several ES contracts without having to alter your approach very much. Prop firms like that about knowing if you can trade one, you might be able to trade five.
But here's the hitch: all those advantages come with an equally long list of ways to screw it up.
The "Evaluation" Isn't Just About Trading Skills
One of the largest misconceptions that I come across is that traders believe the analysis is all about profitability. The reality is that most futures trading prop firm models of evaluation — particularly for S&P futures — are actually all about how you trade constrained.
You may be saying to yourself, "Constraints? You mean like risk limits?" Yes. But that's not all. The assessment is regarding whether you can profit while adhering to drawdown limits, maximum daily losses, position size rules, and other safeguards.
That is, the prop firm isn't simply interested in seeing you win — they want to see you win responsibly.
Challenge #1: The Tightrope of Drawdowns
Most tests will strike you with two drawdown limits:
- Max daily drawdown — Lose over this in one trading day and you're finished.
- Max trailing drawdown — Your account balance can't lose more than an amount set by you from its highest balance.
The ES complicates this by each tick costing $12.50 per contract. That's insignificant until you consider the market has the potential to move 8–10 points in a flash. A 10-point loss against you? That's $500 per contract, lost. Trade two contracts and you're sitting on a $1,000 deficit.
Your maximum daily loss is $1,000, which means one bad trade can knock you out before lunch.
Why it's so difficult: The ES is a grinder's market one day and a runaway freight train the next. If you look too big too early, you stand to blow the daily loss limit in a single trade. Size too little and you may never reach the profit goal.
Challenge #2: The Profit Target Mirage
Suppose that your test demands reaching $3,000 profit before you pass. Sounds possible, right? But that's where the psychological trap comes in — traders tend to begin the test cautiously, then become aggressive near the end to "hurry things along." That's when errors compound.
Because the ES has that tight spread and constant volatility, it's easy to overtrade. But each time you click the buy or sell button, you're opening yourself up to risk that could take days off.
Key mindset adjustment: The objective isn't to reach the target in record time — it's to reach it without violating rules. Hurrying tends to do the opposite.
Challenge #3: Choppy Days Will Test Your Sanity
Here's the dirty little secret of the ES: it chops a lot sideways, enticing traders in, then whipsaws them out.
In an assessment, choppy days are problematic since you can drip out slowly — a few ticks lost here, a few there — before finding yourself halfway to your daily loss ceiling without even knowing it.
The real test isn’t just recognizing chop; it’s having the discipline to sit on your hands until the market decides to pick a direction. And when you’re under evaluation pressure, doing nothing feels like failure.