One-Step vs Two-Step Prop Firm Challenges

Before a prop firm hands over a funded account, you usually have to pass an evaluation. Some firms run a single phase, others run two before they'll fund you. The choice is more than paperwork: it changes the profit target you have to hit, the drawdown you're given to hit it, the price on the checkout page, and, quietly, how likely you are to pass at all.

What it is

A challenge is a paid test of whether you can trade to the firm's rules. The two formats are simple enough:

One-step — a single evaluation phase. Hit the profit target without breaking the drawdown rules and you're funded.
Two-step — two phases back to back. Clear phase one, then a second, usually easier phase, then you're funded.

Both end in the same place: a funded account with a profit split. What differs is how many hurdles stand between you and it, and how tall each one is.

How it works

A common two-step setup asks for around 8% profit in phase one and 5% in phase two, with a 10% maximum drawdown and a 5% daily limit, and often no time pressure. A one-step version typically asks for a single target near 8–10%, but pairs it with a tighter drawdown — say 6% — to compensate for there being only one gate to clear.

That trade-off is the whole story. Two phases give the firm two looks at you, so they can afford to be generous with drawdown. One phase gives them a single look, so they protect themselves by squeezing the room you have to breathe. Fewer hurdles, less margin for error on each.

A worked example

Take a £100,000 account. The two-step route: make £8,000 in phase one and £5,000 in phase two, staying within a £10,000 total drawdown throughout. Slower, but a losing week rarely ends you. The one-step route: make £8,000 once, but stay within a £6,000 drawdown the whole time. Faster to funding, and often cheaper — but that £6,000 floor is unforgiving. A single volatile trade, or an EA that takes a normal-sized drawdown before recovering, can end the account on the one-step where the two-step would have absorbed it. Same trader, same strategy, different outcome.

Which suits which trader

A one-step suits a consistent trader who wants funding quickly and trades with modest, controlled risk — someone whose equity curve rarely dips hard. It rewards confidence and punishes variance. A two-step suits swing traders, news traders and most EAs, anything that needs room to move through a rough patch before it comes good. If your strategy's normal behaviour includes a 5–6% dip on the way to profit, a tight one-step drawdown will end you on an ordinary week, and the extra phase of a two-step is a price worth paying for the breathing space.

Cost and pass rate

One-step challenges often carry a lower fee and, on the surface, look like better value — one payment, one target. But the tighter drawdown usually means a lower pass rate, so the cheaper ticket can cost more in retries. Two-step challenges cost a little more up front and take longer, but the softer drawdown means more people reach funding. Neither is objectively cheaper; it depends whether your strategy is more likely to be killed by a hard target or by a hard drawdown.

What to check before you buy

Drawdown type — static or trailing. A trailing limit that follows your equity up is far harsher than a fixed floor.
The daily loss limit as well as the overall one. Many accounts die on the daily rule, not the total.
Minimum trading days and any time limit on each phase.
Whether EAs and your specific style are allowed at all.
Whether the fee is refunded on your first payout, which changes the true cost of a one-step versus a two-step.

The Karnek note

Karnek tracks your live drawdown against the limit you set for the phase you're in, and alerts you as you approach it — before a breach ends the challenge rather than after. It reads your terminal read-only and can never place a trade or touch the account.

See it in Karnek: see how Karnek works, read-only monitoring for every MT4 and MT5 account.