How to pass a two-step prop firm challenge
Two-step challenges give you more room than most, usually a 10% static maximum loss, but ask for two targets in a row. A simple plan for each phase removes most of the ways traders throw them away.
Before you start
- Test your strategy against the account's rules. If your pass chance is below about 40%, change the account or the strategy, not your hopes.
- Set your risk so you can survive at least eight to ten losses in a row. On a 10% limit, that is about 1% per trade. See how much to risk per trade.
- Write down your daily stop: a point at which you stop trading for the day, well inside the firm's daily limit.
Phase one: build a cushion
The first target is usually 8% to 10%. Trade your normal setups at your planned size. Because the maximum loss is static, every profit adds room. Once you are 4% to 5% up, you can survive a much longer losing run than at the start.
Near the target: when you are within one or two winning trades of it, many traders reduce size slightly. A full-size losing streak now costs more progress than it needs to.
At the target: stop. If you still need minimum trading days, take only small trades on the days you need.
Phase two: same strategy, smaller target
The second target is usually 5%, with the same loss limits. Two common approaches:
- Same size as phase one. Reaches the target faster, with the same risk of failure per trade.
- Reduced size. Since the target is half the size, trading at around two thirds of your phase one size still gets there with more room for a bad run.
What doesn't work is changing strategy because phase one "went well". Phase two failures are often caused by overconfidence.
The funded stage
Once funded, the account starts again at its original balance and there's no target, only payout conditions. Go back to the size you used at the start of phase one, and check any new rules such as consistency limits. See what happens after you pass.
If you fail
Look at what broke the account: the daily limit, the maximum loss, or a rule. If the cause was size, retest at a lower size before buying again. If it was the strategy, more attempts won't fix it.
Compare two-step accounts
Browse the two-step prop firm challenges we track, read one-step vs two-step, and run your trades through the test centre to see your odds at each.
More guides
- Why most traders fail prop firm challenges
- How much to risk per trade on a prop firm challenge
- How to backtest a strategy for a prop firm challenge
- Prop firms for swing traders
- How trailing drawdown works, and why it catches traders out
- One-step vs two-step prop firm challenges
- Instant funding: what's the catch?
- Prop firm consistency rules explained