An evaluation is the test a prop firm sets before it gives you a funded account. You trade an account under fixed rules: a profit target to reach, a daily loss limit, a maximum loss limit, and usually a minimum number of trading days. Pass every rule and the firm funds you. Break any one rule and the evaluation fails, even if you already hit the target.
Evaluations come in one step, two steps, or no steps at all. A one-step evaluation has a single phase with a higher target. A two-step evaluation splits the target across two phases, usually with a lower target in phase two. Instant funding skips the evaluation entirely, but the fee is higher and the funded rules still apply from day one.
This stage matters because it is where most traders lose their fee. The rules are strict by design, and the fee is refunded on some plans and kept on others. Treat the evaluation fee as money already spent, not as money you will get back.
The common trap is thinking that passing the evaluation means the hard part is over. Funded accounts carry their own daily and maximum loss limits, and breaching a funded account loses it just as finally as breaching an evaluation. Passing is the start of the funded rules, not the end of them. Prop trading can cost you every fee you pay.