Trading can be both exhilarating and challenging, especially when you're looking to level up and manage larger amounts of capital. That's where My Funded FX comes in, offering aspiring traders the opportunity to prove their skills through a structured process. Their Two Phase Challenge is designed to test and refine your trading abilities in a simulated environment before you graduate to live trading with a funded account. In this article, we'll dive deep into the specifics of this challenge, exploring each phase, the rules, and how you can succeed.

Challenge Overview

What is the Two Phase Challenge?

The Two Phase Challenge is a comprehensive evaluation process that My Funded FX uses to assess a trader's ability to manage risk, meet profit targets, and follow trading rules consistently. Unlike one-off evaluations, this challenge is divided into two distinct phases, each with its own set of objectives and conditions. The goal is to ensure that only the most disciplined and successful traders advance to manage real capital. 

Importance of a Two-Phase Approach

A two-phase approach allows for a more rigorous evaluation of trading skills. In Phase 1, the focus is on achieving specific profit targets while managing drawdowns. Phase 2 further tests the trader's consistency and ability to maintain profitability over time. By the time you reach the live trading stage, you’ve proven your ability to handle pressure and adhere to strict trading rules.

Challenge Name: 2-Step

Pricing Breakdown

My Funded FX offers several account sizes in their 2-Step Challenge, catering to traders with different levels of experience and financial commitment. Here’s a breakdown of the pricing:

• $5,000 Account: $50
• $10,000 Account: $100
• $25,000 Account: $200
• $50,000 Account: $300
• $100,000 Account: $500
• $200,000 Account: $950
• $300,000 Account: $1,399

This tiered pricing allows traders to choose an account size that aligns with their trading goals and risk tolerance.

Drawdown Type

Explanation of Balance-Based Drawdown

In the My Funded FX 2-Step Challenge, a balance-based drawdown is implemented. This means that your drawdown is calculated based on your account balance, not equity. Essentially, this rule dictates how much of your initial balance you can lose before you’re disqualified. It's a crucial element in managing your risk effectively.

Managing Risk with Drawdown Limits

The challenge enforces an 8% overall drawdown limit, which means if your account balance drops by 8% from its starting point, you’ve failed the challenge. Additionally, there is a 5% daily drawdown limit that ensures you manage your risk on a day-to-day basis. These limits are in place to promote disciplined trading and prevent catastrophic losses.

Copy Trading and EA Rules

Guidelines for Copy Trading

Copy trading is allowed under specific conditions in the My Funded FX challenge. However, the use of Expert Advisors (EAs) that automate trading strategies is strictly controlled. EAs are allowed, but they must not exploit platform weaknesses or manipulate trades in any unfair manner. Violating these conditions can lead to disqualification from the challenge.

Conditions for Using Expert Advisors (EAs)

The platform no longer allows EAs on Platform 5, and any copy trading must not be automated through EAs. Traders must ensure that their trading methods align with live market conditions, avoiding any form of simulated trading strategy that could be considered unfair or manipulative.

News Trading

Rules for Trading During News Events

Trading during major news events can be risky due to increased volatility. My Funded FX allows news trading, but traders must exercise caution and ensure that their strategies are robust enough to handle the sudden market movements that news releases can cause.

Importance of Staying Updated

Keeping up with the economic calendar and being aware of upcoming news events is vital for any trader. It helps you anticipate market movements and adjust your trading strategy accordingly, ensuring that you stay within the drawdown limits.

Profit Target

Detailed Breakdown of Profit Targets

The profit targets in the 2-Step Challenge are designed to test your trading skills under realistic conditions. In Phase 1, the target is set at 8% of the starting account balance. In Phase 2, the target is slightly lower at 5%. These targets are achievable but require disciplined trading and effective risk management.

Strategy to Meet Profit Targets

To meet these profit targets, traders need to adopt a strategic approach. This could involve using a combination of technical and fundamental analysis, maintaining a balanced risk-reward ratio, and avoiding overtrading. Consistency is key—achieving small, steady gains is often more effective than aiming for large, risky trades.

Payout Period

Understanding the Payout Schedule

Once you’ve completed the challenge and moved into the live trading phase, My Funded FX offers a payout every 14 days. This payout schedule is designed to reward consistent performance and allow traders to withdraw their profits regularly.

Importance of a 14-Day Payout Period

The 14-day payout period ensures that traders have enough time to demonstrate their skills over multiple trades before receiving their earnings. It also aligns with the platform’s emphasis on consistent performance rather than short-term gains.

Scaling Rules

How Scaling Works

My Funded FX offers a simulated scaling plan that increases your demo account’s initial balance by 25% every three months, provided certain criteria are met. This scaling plan is designed to reward traders who can consistently generate profits while managing their risk effectively.

Conditions to Qualify for Scaling

To qualify for scaling, your demo account must be at its initial balance at the start of each 90-day period, and you must achieve a total simulated profit of 12% or more within that period. This encourages traders to maintain a high level of performance over time, rather than just meeting the minimum requirements.

Conditions and Restrictions

Important Conditions to Be Aware Of

There are several conditions and restrictions that traders must adhere to during the 2-Step Challenge. For example, using simulated trading strategies that exploit errors or slow data feeds is strictly prohibited. Additionally, manipulating trades to exploit the demo server or engaging in trades that contradict the terms of service can lead to disqualification.

Prohibited Actions and Their Consequences

Violating the rules of the challenge can have serious consequences, including account termination. This includes engaging in high-speed trading techniques, AI-driven strategies, or mass data entry methods that provide an unfair advantage. Traders must ensure that all their actions are in line with typical live market practices.

Phase 1: Challenge Details

Simulated Gains Target

In Phase 1 of the 2-Step Challenge, traders must achieve a simulated profit target of 8%. This target is based on the starting balance of your demo account and is a critical factor in advancing to the next phase.

Drawdown Limits and Risk Management

During this phase, traders must stay within the 5% daily drawdown limit and avoid exceeding the overall 8% maximum loss. Managing your risk effectively during this phase is crucial for success.

Trading Time Limits and Requirements

While there is no specific time limit for completing Phase 1, traders are required to trade for a minimum of one day. Additionally, there must be at least three profitable trading days to meet the minimum requirements.

Phase 2: Challenge Details

Achieving the Simulated Gains Target

Phase 2 requires traders to achieve a slightly lower simulated profit target of 5%. This phase tests your ability to maintain consistent performance while managing a slightly tighter set of rules.

Managing Drawdown Limits in Phase 2

The drawdown limits remain the same in Phase 2, with a 5% daily drawdown and an overall maximum loss of 8%. Successfully navigating this phase demonstrates your ability to maintain discipline and control over your trades.

Transitioning to the Live Sim Account

Once you’ve completed Phase 2, you transition to the Live Sim Account. This is where you begin trading with real capital, applying the skills and strategies you’ve honed during the challenge.

Live Sim Account Rules

Trading Requirements in the Live Sim Account

In the Live Sim Account phase, there are no specific profit targets. However, the drawdown limits still apply, with a 5% daily drawdown and an 8% overall maximum loss. You must also wait a minimum of 14 calendar days after your first trade to request your first payout.

Payout Rules and Profit Sharing

Traders receive 80% of the net gains made in the Live Sim Account. The payout is processed every 14 days, allowing you to withdraw your profits regularly. This phase emphasizes the importance of consistency and risk management, as you’re now trading with real capital.

Daily Loss Level for 2-Step Simulated Accounts

Detailed Explanation of Daily Drawdown Limits

The daily drawdown limit is a critical rule that applies throughout the 2-Step Challenge. It’s set at 5% for all phases, meaning your equity should not decrease by more than this amount in a single trading day. This rule helps traders manage their risk and avoid significant losses.

Examples to Illustrate Daily Loss Management

For example, if you start the day with a $100,000 account, your maximum daily loss would be $5,000. If your equity drops below $95,000 at any point during the day, you’ve hit the drawdown limit and may be disqualified. This rule emphasizes the importance of managing your trades carefully and avoiding large losses in a single day.

Conclusion

The My Funded FX Two Phase Challenge is designed to test and refine your trading skills in a structured, disciplined environment. By adhering to the rules, managing your risk effectively, and maintaining consistent performance, you can advance through the challenge and begin trading with real capital. Remember, the key to success in this challenge is discipline, patience, and a solid trading strategy.