One-Step Challenge vs. Two-Step Prop Firm Evaluation: Which is Better?

Prop firms provide traders with new ways to start their trading journey. Now those traders can also start their trading career who don’t have large amounts of money to invest and save larger positions in trading. This is only possible with the help of prop firms. These firms provide traders with an amount of money to start and trade. Traders are mostly confused in the selection of prop firms. They don’t have idea which firms they need to choose either one-step challenge prop firms or two-step prop firm evaluations. If you are also confused then let’s discuss in detail the features of both one-step and two-step challenge prop firms so you get a better idea of which one is better for you. 

What are Prop Firms?

Prop firms provide traders the capital to start their trading journey and in return for this capital, these firms take a specific portion of traders’ profit. Not all traders are funded as it depends on the skills of traders. The firms provide large amounts of capital that’s why they need those traders who protect this capital and provide them with specific profits on it. To check these skills of traders best prop firms first take an evaluation or test from traders in which they achieve a specific target and prove themselves. After achieving these profit targets traders get access to funded accounts. The method and criteria of this challenge are different in each firm. These firms are categorized as one-step or two-step. 

What are One-Step Evaluation Prop Firms?

One-step evaluation prop firms consist of only a single step in which traders have to prove their skills. These firms have very simple but strict evaluation criteria. Once traders complete this single phase they get access to the funded account. In this model:

• Traders must meet a specific profit target within a set period.
• They must adhere to risk management rules such as drawdown limits and daily loss limits.
• There is no second verification phase that’s why this process is more faster and more simple to understand and pass.

Pros of One-Step Challenges

• Faster access to funding as traders who pass the challenge can get funded quickly sometimes even within a week.
• Lower psychological pressure because one evaluation phase means traders don’t have to endure multiple rounds of testing.
• Simplified Rules as the challenge structure is very straightforward and makes it easier to understand and follow.
• Lower Costs because there’s only one phase so the entry fee is often lower than multi-step evaluations.

Cons of One-Step Challenges

With different profits one-step evaluation prop firms also have cons including

• Higher Profit Targets because some firms require a more aggressive profit target compared to two-step evaluations.
• Stricter Risk Management as many one-step challenges have tighter risk limits to ensure only disciplined traders can qualify for this challenge.
• Lower Success Rate due to tougher profit targets and stricter rules so fewer traders pass this evaluation.

What Is a Two-Step Evaluation?

A two-step evaluation consists of two phases. Traders must pass these two phases with different profit criteria to get access to funded trading accounts. In phase 1 traders must achieve a profit target while following risk management rules. In phase 2 traders are given a relatively smaller profit target as compared to the first phase. The second phase also has lenient trading conditions. After passing both phases, traders receive a funded account.

Pros of Two-Step Evaluations

• Lower profit targets as compared to one-step challenges, two-step models have more achievable profit targets because it divided into two phases. 
• More flexible risk management because some firms allow more room for losses in the second phase.
• Higher success rate because the challenge is split into two phases and traders have a better chance of passing.
• More realistic trading expectations because the evaluation structure often consists of real trading conditions and preparing traders for the funded account.

Cons of Two-Step Evaluations

• Takes more time as traders need to complete two phases which can extend the process by weeks or even months.
• Higher entry costs because some two-step evaluations have a higher entry fee than one-step challenges.
• Increased psychological pressure when having to pass two phases can be mentally demanding and cause traders to make errors under pressure.

Which Firms do Traders need to Choose? 

When it is time to decide whether traders need to choose a one-step challenge prop firm or a two-step challenge prop firm then they first need to analyze the working of both firms. Then traders assess their needs and preferences. If they can work under strict risk management rules and want to get access to funding accounts then traders can choose one-step evaluation prop firms. If traders need time to achieve profit targets then they can prefer two-step evaluation prop firms with flexible trading conditions and risk management rules.