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Proprietary trading firms (prop firms) offer traders access to capital, allowing them to trade without risking their own funds. However, most prop firms require traders to pass an evaluation process before granting them access to funded accounts. One of the most popular evaluation models is the 2 Step Challenge, which requires traders to complete two phases designed to test profitability and risk management.

This article will compare the 2 Step Challenge model with various prop firms to determine which firms offer the best funding opportunities for traders.

1. Understanding the 2 Step Challenge in Prop Firms

What is the 2 Step Challenge?

The 2 Step Challenge is a structured evaluation process that traders must pass to receive a funded account. Unlike single-phase challenges, this model requires traders to demonstrate consistency over two separate stages before gaining full access to capital.

How Does the 2 Step Challenge Work?

The evaluation process typically involves:
✔ Phase 1: Traders must achieve a specific profit target while adhering to risk management rules.
✔ Phase 2: Traders must prove consistency with a lower profit target and similar risk rules.
✔ Funded Account: Upon successful completion, traders receive access to a real trading account with profit-sharing benefits.

Why Do Prop Firms Use a 2 Step Challenge?

Prop firms implement the 2 Step Challenge to ensure traders are:

• Profitable across multiple market conditions.
• Disciplined in following trading rules and risk management strategies.
• Consistent in their performance before handling real capital.

2. Key Benefits of the 2 Step Challenge for Traders

1. Encourages Consistency and Risk Management

Unlike single-phase challenges that may encourage aggressive trading, the 2 Step Challenge ensures traders develop long-term sustainable strategies.

2. Higher Success Rate for Long-Term Traders

Passing two evaluation phases filters out reckless traders, increasing the chances of long-term success.

3. More Trust from Prop Firms

Prop firms have more confidence in traders who complete two steps, leading to better trading conditions and higher profit splits.

4. Lower Profit Targets Per Phase

Since traders must complete two phases, prop firms often set lower profit targets for each phase, making it easier to pass than one-step challenges.

5. Access to Larger Capital

Many of the best prop firms offering a 2 Step Challenge provide funding from $10,000 to over $500,000, allowing traders to scale up their accounts.

3. Comparing the Best Prop Firms Offering the 2 Step Challenge

Several top prop firms use the 2 Step Challenge model. Below is a comparison of some of the best options for traders.

Key Takeaways:
✔ FTMO offers one of the most trusted and structured challenges.
✔ My Forex Funds provides a lower profit target than FTMO, making it slightly easier to pass.
✔ The5ers offers a unique low-drawdown model, ideal for low-risk traders.
✔ FundedNext and E8 Funding provide competitive profit splits and solid scaling options.

4. How to Choose the Best Prop Firm for a 2 Step Challenge

1. Profit Targets & Drawdown Rules

• Choose a prop firm with achievable profit targets that match your trading strategy.
• Ensure the drawdown rules are reasonable to avoid unnecessary failures.

2. Profit Splits & Payouts

• FTMO and FundedNext offer up to 90% payout, making them attractive for professional traders.
• Some firms provide bi-weekly or instant payouts, ensuring faster withdrawals.

3. Trading Platforms & Execution Speed

• The best prop firms support MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader.
• Look for firms with low spreads and fast execution to prevent slippage.

4. Scaling Opportunities

• If you want higher capital, go for a firm with a scaling plan, such as The5ers or FTMO.
• Some firms allow traders to increase their accounts to $1 million+ over time.

5. Trading Conditions & Rules

• Check if the prop firm allows news trading, weekend holding, and EAs (expert advisors).
• Some firms have strict rules that may limit your strategy.

5. Strategies to Pass a 2 Step Challenge Successfully

1. Stick to a Proven Trading Strategy

• Choose a strategy that aligns with the profit targets and risk limits of the challenge.
• Avoid high-risk approaches that could lead to excessive drawdowns.

2. Focus on Risk Management

• Maintain a low risk per trade (e.g., 1-2% per position).
• Use stop-loss orders to protect capital.

3. Trade the Best Currency Pairs and Assets

• Stick to high-liquidity markets like EUR/USD, GBP/USD, and gold (XAU/USD).
• Avoid exotic currency pairs with high spreads and volatility.

4. Maintain Psychological Discipline

• Avoid revenge trading or overtrading after losses.
• Take breaks to ensure you stay mentally focused.

5. Follow the Trading Rules Strictly

• Ensure you meet minimum trading days if required.
• Stay within the maximum drawdown limits to avoid disqualification.

Final Thoughts: Is the 2 Step Challenge Right for You?

The 2 Step Challenge is one of the best ways to secure funding from top prop firms. While it requires patience and discipline, it provides a structured path to success, ensuring traders build sustainable strategies.

✔ If you're a trader looking for long-term growth, lower risk, and better trading conditions, the 2 Step Challenge is an excellent choice.
✔ Choosing the best prop firm depends on your profit target, drawdown tolerance, and trading style.

By selecting the right prop firm and applying solid risk management techniques, traders can successfully complete the 2 Step Challenge and achieve long-term profitability in the funded trading space.