How to Pass One-Step and Two-Step Evaluation Challenges in Prop Firms for Maximum Funding

Proprietary (prop) trading firms offer traders the opportunity to trade with the firm’s capital rather than their own. To qualify for funding, traders must pass evaluation challenges, which come in two main formats: one-step challenge prop firms and 2 step evaluation models. Each has its own set of rules, profit targets, and risk management criteria. Understanding these challenges is crucial for traders looking to secure funding and maximize their trading potential.

Understanding the One-Step Challenge Prop Firm Model

The one-step challenge prop firm model is a simplified evaluation process designed to test a trader’s ability to generate consistent profits within a short period. It typically involves:

• A single-phase evaluation process.

• A defined profit target (e.g., 10% of starting capital).

• A maximum daily and overall drawdown limit.

• A fixed trading period (e.g., 30 days).

• Rules on risk management and leverage.

Advantages of One-Step Challenge Prop Firms

1. Faster Access to Funding – Traders can qualify quickly, allowing them to start trading with the firm’s capital sooner.

2. Less Stressful Process – Since there’s only one phase, traders can focus on achieving their targets without worrying about additional evaluation rounds.

3. Higher Risk-Reward Ratio – Some firms allow higher leverage, giving traders more flexibility in executing their strategies.

Challenges of One-Step Evaluations

• Strict Risk Management Rules – A single large drawdown can lead to disqualification.

• Pressure to Perform Quickly – Traders must meet the profit target within a limited time frame.

• Limited Growth Opportunities – Some firms have restrictions on scaling the funded account after qualification.

Understanding the Two-Step Evaluation Model

The 2 step evaluation model is a more structured approach that assesses a trader’s ability to generate consistent profits over an extended period. This process typically involves:

1. Phase One: Achieving a profit target (e.g., 8-10%) while adhering to strict risk limits.

2. Phase Two: A second round of evaluation with a lower profit target but continued risk management criteria.

3. Verification Period: Some firms require traders to prove consistency before receiving funding.

Advantages of Two-Step Evaluations

1. Better Demonstration of Trading Skills – Traders prove they can sustain profitability over multiple phases.

2. Higher Trust from Prop Firms – Firms view two-step evaluations as more reliable, leading to potentially better funding terms.

3. Gradual Risk Exposure – The process allows traders to refine their strategies and risk management practices.

Challenges of Two-Step Evaluations

• Longer Evaluation Period – It takes more time to qualify compared to one-step challenges.

• Tighter Drawdown Limits – Traders must maintain consistent risk management across both phases.

• Increased Psychological Pressure – Passing one phase does not guarantee funding; traders must repeat success in phase two.

Strategies to Pass One-Step and Two-Step Evaluations

1. Understand the Prop Firm’s Rules and Requirements

Before taking any evaluation, study the firm’s specific trading rules, including:

• Allowed trading styles (scalping, swing trading, etc.).

• Maximum drawdown limits.

• Profit targets.

• Leverage and margin requirements.

• Allowed trading instruments.

2. Develop a Profitable Trading Strategy

To succeed in either challenge model, traders should focus on a well-defined trading strategy. This includes:

• Trend Following – Trading in the direction of major market trends.

• Breakout Trading – Capturing momentum from key support and resistance levels.

• Risk Management Techniques – Setting stop losses, limiting trade size, and maintaining a good risk-reward ratio (e.g., 1:2 or higher).

3. Implement Strong Risk Management Practices

Managing risk effectively is the key to passing both types of evaluations. Essential risk management techniques include:

• Risk Per Trade: Never risk more than 1-2% of the account balance per trade.

• Daily Loss Limit: Stop trading if the daily loss approaches 50-75% of the allowed drawdown.

• Diversification: Avoid overexposure to a single asset or currency pair.

4. Master Psychological Discipline

Trading psychology plays a critical role in passing prop firm evaluations. Successful traders:

• Avoid overtrading after losses.

• Stick to their strategy without chasing profits.

• Remain patient and consistent instead of forcing trades.

5. Use Trading Tools and Analytics

Many traders utilize trading journals and analytics tools to track their performance. Platforms like MT5 (MetaTrader 5) offer built-in indicators and risk management features that can enhance evaluation performance.

6. Backtest and Demo Trade Before the Evaluation

Before attempting a funded challenge, traders should practice extensively using demo accounts. This helps refine strategies without financial risk.

Choosing Between One-Step and Two-Step Evaluations

When to Choose a One-Step Challenge

• If you have a high-confidence trading strategy that delivers fast results.

• If you prefer a quicker route to funding.

• If you are comfortable with higher risk and tighter drawdown limits.

When to Choose a Two-Step Evaluation

• If you have a more consistent, long-term trading strategy.

• If you prefer a structured evaluation process with lower pressure.

• If you want a higher probability of maintaining the funded account after qualification.

Conclusion: Maximizing Your Success in Prop Firm Evaluations

Whether choosing a one-step challenge prop firm or a 2 step evaluation, traders must prioritize risk management, psychological discipline, and strategy execution. The right approach depends on individual trading style, risk tolerance, and goals. By carefully selecting the appropriate evaluation model and following a disciplined trading plan, traders can successfully secure funding and maximize their long-term profitability in proprietary trading firms.