Prop Firm Challenge Explained: One-Step, Two-Step and Instant Funding

At a glance

Formats

One-step, two-step, instant funding

Usual rules

Target, daily and max drawdown

Fee

Paid per attempt

Refund

Only under the firm's terms

What is a prop firm challenge?

A prop firm challenge is a paid prop firm evaluation in which a trader must reach a profit target without breaking the firm’s drawdown limits to qualify for a funded trading account. Depending on the firm, the funded account trades real capital or is a simulated funded account on which the firm pays a share of the simulated profits: what is a prop firm.

The main difference between formats is the number of evaluation stages: a one-step prop firm challenge has one, a two-step prop firm challenge has two, while an instant funding prop firm account skips the evaluation.

How does a prop firm challenge work?

The prop firm challenge process usually has four steps:

1. Choose a programme and account size and pay the prop firm challenge fee.
2. Trade the evaluation account under the programme’s rules: a profit target, a daily drawdown limit, a maximum drawdown limit and any other conditions.
3. Pass or fail. Reaching the profit target with every rule respected passes the stage; breaking any limit ends the prop firm evaluation.
4. Receive the funded account after the last stage, usually once identity checks are complete. Payouts then follow the firm’s prop firm profit split.

One-step vs two-step prop firm challenge: what’s the difference?

A one-step prop firm challenge has a single evaluation stage: one profit target, then the funded account. A two-step prop firm challenge has two stages, often called the challenge and the verification, each with its own profit target; the second target is usually lower.

	One-step challenge	Two-step challenge
Number of stages before funding	One	Two
Profit targets	One	Two, usually a lower one in the second stage
Drawdown limits	Can be tighter, or trailing	Can be static, sometimes wider
Evaluation fee structure	One fee for one stage; pricing differs by programme	One fee covering both stages; pricing differs by programme
Time to funded account	Can be shorter	Usually longer

A one-step challenge has fewer stages, while a two-step challenge may offer different drawdown or profit-target conditions. Which suits a trader depends on the programme’s drawdown limits, targets and consistency rules rather than on the number of stages alone.

Prop firm challenge rules comparison: FTMO vs FundedNext

As of October 2026, from the firms’ own rules pages. Rules change, so check the current terms before paying for a challenge.

Programme	Profit target	Daily drawdown	Maximum drawdown	Time limit	Fee refund	Account after passing	Other conditions
FTMO Challenge 2-Step	10% (stage 1), 5% (verification)	5%	10%, static	Not stated on the rules page	Not stated on the rules page	FTMO Account; rules expressed in “Initial Simulated Capital”	At least 4 trading days in each stage
FTMO Challenge 1-Step	10%	3%	10%, end-of-day trailing	Not stated on the rules page	Not stated on the rules page	FTMO Account; rules expressed in “Initial Simulated Capital”	Consistency rule: the best day may not exceed 50% of total profit (positive days’ profit on accounts from orders before 12 October 2026)
FundedNext Stellar 2-Step	8% (phase 1), 5% (phase 2)	5%	10%	None	Refunded with the first payout on the funded account	FundedNext Account; type not stated on the programme page	Maximum risk of 3% at any time on the funded account

How the drawdown limits are calculated, static or trailing, balance or equity: prop firm drawdown rules.

What is an instant funding prop firm?

An instant funding prop firm gives an instant funding account without an evaluation: the trader pays a fee and starts on the funded account directly, so it is a funded account without a challenge. No evaluation prop firm programmes have their own drawdown, consistency and payout rules, and fees are often higher than for a challenge of the same account size, so the terms need the same checks as any prop firm challenge: instant funding.

Other prop firm challenge rules: minimum days, consistency and trading restrictions

• Minimum trading days: the number of days on which a trade must be opened before a stage can be passed.
• Consistency rule: a limit on how much of the total profit may come from one day or trade, such as FTMO’s 1-Step consistency rule: consistency rule, prop firm consistency rule.
• Time limit: some programmes set a period in which the target must be reached; others have none.
• Trading restrictions: some firms limit trading around major news releases, holding positions over the weekend, or strategies such as copy trading; others allow them.

Prop firm challenge fees, resets and refunds

The prop firm challenge fee is paid once per attempt; fees typically vary by account size and programme. A prop firm reset fee restarts a failed or ongoing challenge on the same account, at a price set by the firm.

Is a prop firm challenge fee refundable? Only under the firm’s refund terms. Some firms offer a prop firm refund of the challenge fee with the first payout on the funded account, as FundedNext does on its Stellar 2-Step programme. When a prop firm challenge is failed, the fee is not refunded, and the trader can buy a reset or a new challenge.

Two-step prop firm challenge example: $100,000 account (illustrative only)

Assumptions: two-step challenge on a $100,000 account, 10% profit target in stage 1 and 5% in stage 2, 5% daily drawdown, 10% static maximum drawdown, each stage starting again at $100,000. For the losing-trade counts: identical fixed risk per trade, no costs or slippage, and losses spread across days so the daily limit is not breached.

• Stage 1 passes when the balance reaches $110,000 with all positions closed, without equity falling below $90,000 or losing more than $5,000 in a day.
• Stage 2 passes at $105,000 under the same loss limits.
• At $500 risk per trade (0.5% of the account), the $10,000 maximum drawdown is reached after 20 losing trades; at $2,000 per trade, after 5.

Rules, fees and refund terms vary by firm and programme; this example only shows how the targets and limits fit together.

How to prepare for a prop firm challenge

A prop firm challenge checklist before paying the fee:

• Rules: profit target, minimum trading days and time limit for each stage.
• Drawdown: daily and maximum limits, static or trailing, balance or equity.
• Consistency: any best-day or similar rule.
• Trading restrictions: news trading, weekend holding, expert advisors, copy trading.
• Payout terms: profit split, payout frequency and conditions.
• Refund and reset terms: whether the fee is refunded and what a reset costs.
• Account type: real capital or simulated funded account.

Testing the same rules on a demo account and setting a position size that leaves room before the limits helps show whether a strategy fits the programme: position sizing, forex demo account, trading plan.