Introduction
If you’ve spent any time researching prop trading, you’ve probably noticed that the industry is split into two main challenge models: 1-step and 2-step. Both are designed to prove you can trade profitably and manage risk, but they do it in very different ways choosing the wrong one can mean wasted time, unnecessary pressure, and a blown account before you even get funded.
I’ve traded through both structures and i can tell you this: there is no universal “best” prop firm challenge. There is only the best suitable model for your trading style, psychology, and goals. In this guide I will break down the real differences between 1-step and 2-step prop firm evaluations, including profit targets, drawdown rules, payout structures, and which one actually gives you a better shot at passing.
What Is a 1-Step Prop Firm Evaluation?
A 1-step prop firm evaluation is exactly what it sounds like: one phase you buy a challenge, receive a set of rules, and you have one profit target to hit. Once you hit that target without breaking the drawdown rules, you’re funded. No second phase, no verification period, no moving goalposts.
Most 1-step evaluations require a profit target of 8% to 10% the drawdown is usually a static or balance-based drawdown, meaning your loss limit is calculated from your starting balance rather than your highest balance. This gives you more breathing room because it doesn’t move against you as you make profits.
The biggest appeal of a 1-step challenge is speed. If you’re a confident, consistent trader, you can pass in a few days or a couple of weeks. You don’t have to maintain a certain level of performance over multiple phases. You just prove yourself once, and you’re in.
But there’s a catch. The profit target is higher than a single phase in a 2-step challenge, and because the drawdown is often static, some traders become overly aggressive and take oversized risks early on that’s why 1-step challenges are better suited for traders who already have a proven edge and can handle the psychological weight of a larger target.
What Is a 2-Step Prop Firm Evaluation?
A 2-step prop firm evaluation is the more traditional model. It consists of two phases:
Phase 1 (Challenge): Hit a profit target, usually 8% to 10%, while respecting the drawdown limits.
Phase 2 (Verification): Hit a smaller profit target, often 4% to 5%, to prove that your Phase 1 performance wasn’t luck.
In many modern 2-step prop firm models, the targets have been lowered to 4% + 4%, making each phase individually easier than a 1-step challenge. The idea is simple: you don’t need to be a hero in one phase. You just need to be consistent over two smaller phases.
The 2-step model is often seen as more forgiving because the profit targets are smaller per phase. However, it can also be mentally draining. You pass Phase 1, and then you have to do it again. Some traders get impatient during Phase 2 and overtrade, turning a near-certain funded account into a blown one.
The drawdown rules in 2-step challenges vary. Some firms use trailing drawdown in Phase 2, which means your loss limit moves with your equity as you make profits. This can be dangerous if you don’t fully understand how it works. Other firms use static drawdown throughout, which is more relaxed.
1 Step vs 2 Step Prop Firm Rules Explained
Let’s compare the two prop firm structures side by side so you can see exactly what you’re signing up for.
Feature | 1-Step Evaluation | 2-Step Evaluation |
Number of Phases | 1 | 2 |
Typical Profit Target | 8% – 10% | 4% + 4% or 8% + 5% |
Time to Fund | Faster (can be days) | Slower (usually weeks) |
Drawdown Type | Often static / balance-based | Mixed: static or trailing |
Psychological Pressure | Higher target, but only one phase | Lower target per phase, but two phases |
Best For | Experienced, confident traders | Beginners and consistency-focused traders |
Cost | Often higher for the same account size | Often lower upfront, but more time required |
Payout Timing | Usually after first funded month | Usually after first funded month |
The key difference is time vs. target. A 1-step challenge asks you to make a larger profit in a shorter period. A 2-step challenge asks you to make smaller profits but prove you can do it twice.
1 Step vs 2 Step Prop Firm Drawdown Comparison
Compare Drawdown rules are where most traders fail, so this is the section you need to read carefully.
Static Drawdown
A static drawdown is calculated from your starting balance. For example, if you buy a $100,000 account with a 10% static drawdown, your equity cannot fall below $90,000 at any point. It doesn’t matter if your balance goes up to $110,000; your stop-out level stays at $90,000.
This is the most relaxed drawdown rule because it gives you a fixed safety net. It’s common in 1-step evaluations and some 2-step evaluations.
Trailing Drawdown
A trailing drawdown is calculated from your highest balance or equity. If your $100,000 account has a 10% trailing drawdown and you grow your balance to $110,000, your stop-out level moves up to $99,000. This locks in profits but also increases the risk of getting stopped out during normal market fluctuations.
Trailing drawdowns are more common in 2-step challenges, especially during the verification phase. They force you to manage risk more tightly and avoid giving back profits.
Equity-Based vs. Balance-Based Drawdown
Some firms calculate drawdown based on equity (your current account value including open positions), while others use balance (your account value after closed trades).
Equity-based drawdown is stricter because an open floating loss can trigger a violation even if you close the trade later at a smaller loss. Balance-based drawdown is more forgiving because it only checks your account at the end of the day or after trades are closed.
When comparing 1-step vs 2-step prop firm drawdown rules, always ask:
Is the drawdown static or trailing?
Is it equity-based or balance-based?
When is the calculation updated?
A 1-step challenge with a static, balance-based drawdown is generally the most relaxed. A 2-step challenge with a trailing, equity-based drawdown is the most stressful.
Profit Targets: Which Model Is Easier?
This is the question every trader asks: Which prop firm challenge is easier: 1 step or 2 step?
The answer depends on how you define “easier.”
If you’re looking at raw math, a 2-step challenge with 4% + 4% targets is easier per phase. You only need to make 4% in Phase 1 and 4% in Phase 2. That feels much more achievable than a single 10% target.
But if you’re looking at total effort, a 1-step challenge might be easier because there’s only one phase. You don’t have to maintain discipline for weeks. You can go all-in for a short period, hit your target, and get funded.
Here’s what I’ve learned from personal experience:
1-step challenges reward decisiveness. If you have a high-probability setup, you can size up, hit 8% quickly, and move on.
2-step challenges reward consistency. You can’t just get lucky for a week. You have to prove your edge over two separate periods.
If you’re a swing trader who takes a few high-quality trades per month, a 1-step challenge might feel easier because you have more room to let winners run. If you’re a scalper or day trader who prefers smaller, frequent wins, a 2-step challenge might feel easier because the per-phase target is lower.
There’s no universal answer. But if you’re a beginner, I generally recommend starting with a 2-step challenge because the smaller targets reduce the temptation to overtrade.
Prop Firm Challenge Rules & Risk Management
Regardless of whether you choose a 1-step or 2-step challenge, you’ll need to follow strict prop firm risk management rules. Here are the most common ones:
Max Daily Loss
Most prop firms enforce a maximum daily loss limit, usually 4% to 5% of your starting balance. This is often calculated from your account balance at the end of each day (or your equity at the start of the day). If you lose more than this in a single day, your account is breached.
This rule is designed to prevent traders from revenge trading after a loss. It also means you can’t just risk 10% on one trade and hope for the best.
Max Total Loss
The maximum total loss is the overall drawdown limit for the entire challenge. It’s typically 8% to 10% of your starting balance. This is your safety net. Once you hit it, the account is gone.
In a 1-step challenge, the max total loss is often the same as the static drawdown. In a 2-step challenge, the total loss may be applied to both phases.
Leverage
Leverage varies by prop firm. Some offer 1:30, others offer 1:100 or even 1:200. Higher leverage gives you more flexibility, but it also increases the risk of blowing through your daily loss limit.
News Trading
Many prop firms restrict trading during high-impact news events. Some ban news trading entirely, while others allow it but widen spreads. If you’re a news trader, you need to check the rules before buying a challenge.
EA Usage
Some firms allow Expert Advisors (EAs) and algorithmic trading, while others prohibit them. If you use a bot, make sure the prop firm supports it.
Consistency Rules
A growing number of prop firms enforce consistency rules, such as no single trade can account for more than 30% or 40% of your total profit. This prevents traders from hitting the profit target with one lucky trade.
These rules matter more than the number of steps in your challenge. You can have a 1-step challenge with relaxed drawdown, but if the daily loss limit is too tight, you’ll still struggle.
Prop Firm Payout Structure and Profit Split
Getting funded is only half the battle. You also need to understand the prop firm payout structure.
Profit Split
Most prop firms offer a profit split of 70% to 90% in favor of the trader. In a 1-step challenge, profit splits are often higher because the challenge is harder. In a 2-step challenge, the split might start at 80% and increase as you pass scaling milestones.
First Payout Timing
Some firms allow you to request your first payout after two weeks of funded trading. Others require a full 30-day cycle. If you need regular income, look for a firm with faster payout cycles.
Scaling Plans
Many prop firms offer scaling plans that increase your account size as you become consistently profitable. For example, after three profitable months, your account might double. Some 1-step firms offer aggressive scaling because they want to reward skilled traders quickly.
Refund Policies
Some firms refund your challenge fee after you pass. This is more common with 2-step challenges. If you’re worried about the upfront cost, a refundable fee can make the decision easier.
When comparing 1-step vs 2-step evaluations, don’t just look at the profit target. Look at the payout structure. A 1-step challenge with a 90% profit split and weekly payouts might be more valuable than a 2-step challenge with an 80% split and monthly payouts.
1 Step Prop Firm Evaluation vs 2 Step Evaluation: Pros and Cons
Let’s break it down into a simple pros and cons list.
1-Step Evaluation Pros
Faster path to funding: No second phase.
Static drawdown is common: More relaxed risk management.
Higher profit split potential: Many firms reward the extra difficulty.
Great for confident traders: You can move quickly if you have an edge.
1-Step Evaluation Cons
Higher profit target: 8% to 10% is no joke.
More pressure: One mistake and it’s over.
Less forgiving for beginners: You need to be sharp from day one.
2-Step Evaluation Pros
Smaller profit targets per phase: 4% + 4% feels achievable.
More time to prove yourself: Two phases reduce the impact of luck.
Better for learning: You get to practice discipline over a longer period.
Often cheaper: Lower upfront cost for the same account size.
2-Step Evaluation Cons
Takes longer: You can’t get funded in a day.
Trailing drawdown in Phase 2: Some firms make Phase 2 harder than Phase 1.
Mental fatigue: Staying disciplined for weeks is tough.
Best Prop Firm Challenge Structure for Funded Traders
So which structure should you choose? Here’s my recommendation based on trading style.
Choose a 1-Step Challenge If:
You are an experienced trader with a proven edge.
You prefer swing trading or position trading with larger targets.
You want fast funding and can handle pressure.
You are comfortable with a higher profit target in exchange for fewer phases.
You want relaxed drawdown rules like static, balance-based drawdown.
Choose a 2-Step Challenge If:
You are a beginner or returning after a break.
You prefer scalping or day trading with small, frequent wins.
You want lower profit targets per phase.
You need more time to build confidence.
You prefer a lower upfront cost and are willing to wait longer for funding.
What About Crypto and Futures Traders?
Crypto and futures prop firms often use 1-step challenges because the markets are more volatile. A 10% target in crypto can be achieved quickly if you catch a good move. But volatility works both ways, so risk management is critical.
Futures prop firms, on the other hand, often use 2-step evaluations with trailing drawdowns. This is because futures markets have built-in leverage and can move fast the trailing drawdown protects the firm from giving back profits.
Prop Firm with Relaxed Drawdown Rules and Fast Funding
If you’re looking for a prop firm with relaxed drawdown rules and fast funding, you need to prioritize a few key features:
Static drawdown instead of trailing drawdown.
Balance-based drawdown instead of equity-based drawdown.
No time limit or a generous time limit.
Fast payout processing – weekly or bi-weekly.
Clear, transparent rules – no hidden clauses.
Many 1-step prop firms have embraced this model. They offer a single phase, a static drawdown, and a profit target of 8% to 10%. This combination is attractive because it gives you the freedom to trade without constantly watching your stop-out level move against you.
However, not all 1-step firms are created equal. Some use a trailing drawdown even in a 1-step model, which defeats the purpose. Always read the fine print before you buy.
Conclusion
At the end of the day, the choice between a 1-step vs 2-step prop firm challenge comes down to your personality and trading style.
If you want speed, higher profit potential, and relaxed drawdown rules, a 1-step challenge is probably your best bet. You’ll need to be disciplined, focused, and willing to take a bigger target in one shot.
If you want lower risk per phase, more time to prove yourself, and a more structured path, a 2-step challenge is the way to go. It’s especially good for traders who are still developing consistency.
There’s no shame in starting with a 2-step challenge and then moving to a 1-step challenge once you’ve built confidence. In fact, that’s exactly what many successful funded traders do.
The most important thing is to understand the prop firm drawdown rules, profit targets, and payout structure before you spend a single dollar. Don’t just pick the cheapest challenge. Pick the one that gives you the best chance to win.
If you’re ready to compare the best prop firms with relaxed drawdown rules, fast funding, and trader-friendly payout structures, check out TheTrustedProp. It’s the smartest way to find a challenge that matches your trading style and gives you a real shot at long-term funded success.
Choose wisely. Trade consistently. And remember: the goal isn’t just to pass a challenge. It’s to build a sustainable trading career.