Two-step challenges (the FTMO model) require hitting ~10% in Phase 1 and ~5% in Phase 2 before receiving a funded account — slower, but the second phase acts as a calibration run at lower pressure. One-step challenges (E8 Funding, Apex's futures model) require hitting a single target — typically 8–10% — and passing once unlocks funding. One-step is not inherently easier: the drawdown rules are frequently tighter during that single phase to compensate for removing the second screening stage. A $100,000 two-step challenge at FTMO runs approximately €540 (approx. prices; verify current fees before purchasing), while E8 Funding's one-step equivalent is approximately $330 — the price gap is real, but the pass rate difference depends entirely on your strategy, not the format.
What the two structures actually mean in practice
A two-step challenge works like this: Phase 1 sets the high bar — typically 10% profit — under standard drawdown rules (5% daily, 10% maximum). Pass Phase 1 and you move to Phase 2, where the target drops to around 5% under the same drawdown rules. On passing both phases you receive a funded account and the same rules continue indefinitely. FTMO is the canonical example. The intent from the firm's side is to screen for repeatability: anyone can run a hot streak for two weeks; fewer traders can manage risk consistently across two separate evaluation windows.
A one-step challenge compresses both phases into a single evaluation. You hit the target — usually 8–10% — once and you're funded. E8 Funding's one-step product and Apex Trader Funding's futures combine are examples. The marketing appeal is obvious: faster. But the rules that make this work for the firm are often harder. Daily drawdown limits may be tighter (4% rather than 5%), trailing drawdown rules may trail on real-time equity rather than closed P&L only, and minimum trading day requirements may be compressed. Read the specific account rules — the time saved on removing Phase 2 is frequently offset by a stricter loss floor per day.
The drawdown rules that actually determine your pass rate
Whether you're in a one-step or two-step challenge, the rules that eliminate most traders are the same: daily drawdown and maximum trailing drawdown. Understanding how each is calculated is more important than the number of phases. The daily drawdown limit — typically 5% of initial balance — measures intraday equity, not closed P&L. A $3,000 closed loss combined with a $2,500 floating loss on an open position puts you at $5,500 in drawdown against a $5,000 daily limit. You can breach the daily limit without closing a single losing trade. This catches traders who track their closed results but ignore open exposure.
The maximum trailing drawdown is the rule that ends well-run challenges. It does not sit at a fixed floor below your starting balance — it trails your peak equity. At FTMO, the trailing drawdown locks at the initial balance once you've grown equity by 10%, which is a hybrid model worth understanding precisely. At firms where the drawdown trails continuously on real-time equity, a run to +$7,000 followed by a normal mean-reversion drawdown of $10,000 can end your challenge even though you never fell below your starting balance in any meaningful absolute sense. Swing traders are particularly vulnerable because open positions float against them for longer before closing. Before paying any challenge fee — one-step or two-step — confirm in writing whether the trailing drawdown trails on closed P&L only or on real-time equity including open positions. This single distinction changes your practical risk floor more than anything else.
Price comparison: what you actually pay for each structure
Two-step challenges tend to carry a higher upfront fee because they represent more operational overhead for the firm — two evaluation windows, more support queries, longer challenge duration. FTMO's $100,000 two-step challenge is approximately €540 as of mid-2026 (always verify current pricing directly with the firm before purchasing — fees change). E8 Funding's one-step $100,000 account runs approximately $330 at the same period. These are approximate market-known prices and should be treated as directional, not as current confirmed figures.
The fee comparison changes meaningfully when you account for re-attempts. A two-step challenge at a higher price point means a more expensive re-attempt fee if you breach a rule late in Phase 2. One-step challenges are cheaper per attempt, which matters if your strategy carries a material probability of a drawdown breach during an evaluation. Some firms offer funded account resets and discounted re-attempts — calculate your realistic cost across a likely number of attempts, not just the first fee. Firms that refund the challenge fee on the first funded payout (FTMO does this; confirm whether your chosen firm does) change the effective cost structure considerably, since your real cost becomes the opportunity cost of capital locked in challenge fees, not the fee itself.
Which structure suits which trading style
Methodical, low-frequency traders — swing traders, position traders, those who hold across multiple sessions — are generally better served by two-step challenges. Phase 2's lower profit target (5%) at a more relaxed pace gives time to calibrate position sizing to the firm's specific drawdown calculation. The second phase is not redundant; it is a lower-stakes run that reveals whether your risk management translates to a new environment before the funded account is live. Consistency rules — where no single trading day can represent more than a defined percentage of your total P&L — appear more commonly in two-step structures and are worth reading in full if you trade large single-day events.
Aggressive scalpers, news traders (where the firm permits news trading), and high-frequency discretionary traders who generate high win rates over short time windows are better candidates for one-step structures. Their edge degrades over time — extended evaluation windows introduce more opportunity for variance and rule-breach. One-step's compressed timeline plays to this. That said, any trader who hasn't specifically stress-tested their strategy against the firm's drawdown rules under realistic conditions should not choose a structure based on speed alone. The pass rate on two-step challenges at reputable firms is 5–15% — one-step is not meaningfully higher for most traders because the rules adjust to compensate. Speed is not a free lunch.
The firms: who offers what and what to check
FTMO is two-step only — no one-step or instant funding option. It is the benchmark because it has more than ten years of operational history and a transparent corporate structure (incorporated in Prague, Czech Republic; the Czech National Bank reviewed its model and found no securities dealing licence was required because traders are paid from an evaluation service, not execution of financial instruments). If you want the most operationally tested two-step product in the market, FTMO is the reference. Profit target: 10% Phase 1, 5% Phase 2. Daily drawdown: 5% of initial balance. Trailing max drawdown: trails peak equity, locks at initial balance once +10% is reached.
E8 Funding offers both one-step and two-step products under the same brand. Their one-step structure is competitively priced and has generally positive community sentiment as of mid-2026, but their track record is shorter than FTMO's and their jurisdiction (St. Kitts and Nevis) is less transparent. Apex Trader Funding operates in the futures space (CME contracts) with a one-step evaluation model, frequently offering heavy discounts on challenge fees — the economics work at scale and the model is distinct from spot forex prop trading because CME futures are exchange-listed, which places the underlying instruments in a more regulated environment than OTC forex. TopStep is the other major futures player with a comparable one-step combine. For spot forex traders, E8's one-step product is the most commonly compared alternative to FTMO's two-step. For futures traders, Apex and TopStep are the relevant comparison.
Red flags to check regardless of structure
The MyForexFunds collapse in August 2023 — when the CFTC and Ontario Securities Commission filed emergency actions against Traders Global Group Inc. with approximately $310 million in customer funds frozen — is the benchmark cautionary tale for this space. The firm was the market leader in 2022–2023. Its collapse was preceded by payout delays, increased moderation of critical posts, and opacity about the corporate structure. None of these signals are structure-specific: they apply equally to one-step and two-step firms.
Before paying any challenge fee: confirm the registered company name and jurisdiction; confirm whether the trailing drawdown trails on closed equity only or on real-time equity; find at least five independently verified payout screenshots with transaction IDs (not blurred cashier screenshots); check Reddit r/Forex for the firm name plus 'payout' and 'failed' filtered to the last 90 days; screenshot and save the T&Cs page on the day you pay because T&C changes post-challenge are a documented firm behaviour. The Funded Trader paused operations in 2024 due to payment processor issues — a yellow flag. Any firm that cannot sustain payment operations under normal trading conditions has demonstrated a fragility in its business model. This is independent of whether it offers a one-step or two-step product.
- Confirm registered company name and jurisdiction — opaque corporate structure is a disqualifying red flag.
- Identify the trailing drawdown calculation: closed P&L only, or real-time equity including open positions.
- Verify whether the challenge fee is refunded on first funded payout.
- Check news trading policy: if your strategy depends on NFP or CPI volatility, eliminate any firm with a news trading ban.
- Check weekend holding policy: swing traders must confirm they can hold across the close.
- Confirm the aggregate funded capital cap — most firms limit total capitalisation per trader across accounts.
Risk framing: this is not financial advice
Nothing in this guide is financial or investment advice. Prop firm challenges are an unregulated product category in most jurisdictions — there is no dedicated licence for the funded-account model in the EU, UK, US, or Australia. Your evaluation fee is at risk and is not protected by any compensation scheme. An estimated 80–100 prop firms ceased operations between early 2024 and late 2025 as MetaQuotes revoked MT4/MT5 licences. Even a firm operating lawfully can close or suspend payouts. Never pay a challenge fee you cannot afford to lose.
A critical distinction most marketing materials omit: at the vast majority of retail prop firms, you are not trading real capital. Both the challenge and the funded account run on simulated (demo) environments that mirror live market conditions. Your profit split is paid from challenge fee revenue and the firm's retained risk pool — not from live market positions you've taken. This is legal, but it means the business model is entirely dependent on fee income exceeding payout demand. When that ratio inverts — as it did at MyForexFunds — the firm becomes insolvent regardless of how many traders are 'funded'. Some firms (primarily in the futures space, such as TopStep) do place real orders in the market for funded accounts; confirm in writing whether your firm trades your positions live or operates on a simulated basis before paying.
The pass rate on two-step challenges at reputable firms is 5–15%. Choosing a one-step structure does not materially improve your probability of success if the underlying drawdown rules are calibrated to compensate for removing the second phase. Your edge, your risk management, and the specific rule set of the firm you choose matter more than the number of phases. Read the full T&Cs of any firm you consider. If you are uncertain about any rule's application, contact the firm's support team in writing and save the response before paying.
Frequently asked questions
Is a one-step prop firm challenge easier to pass than a two-step?
Not necessarily. One-step challenges remove the second phase but typically compensate with stricter drawdown rules during the single evaluation — a tighter daily drawdown limit, trailing drawdown that trails real-time equity rather than closed P&L only, or less time to hit the target. The pass rate difference between one-step and two-step formats at comparable firms is not significant for most traders. Your strategy's fit with the firm's specific drawdown calculation matters more than the number of phases.
What is the main difference between FTMO and E8 Funding's one-step challenge?
FTMO offers a two-step challenge only (10% Phase 1, 5% Phase 2) with a trailing max drawdown that locks at the initial balance once equity grows 10% — a hybrid model that is more lenient than a continuously trailing floor. E8 Funding's one-step challenge compresses this into a single evaluation phase at a lower price point (approximately $330 vs €540 for $100k accounts — verify current fees before purchasing). FTMO has 10+ years of operational history and a transparent Czech corporate structure. E8 has a shorter track record and is incorporated in St. Kitts and Nevis. Both have generally positive community sentiment as of mid-2026, but the track record gap is a real difference.
Does the trailing drawdown work differently in one-step vs two-step challenges?
The trailing drawdown mechanics depend on the specific firm, not the number of phases. The critical question is whether the trailing drawdown trails on closed P&L only, or on real-time equity including open floating positions. The latter is significantly more aggressive: an unrealised loss on an open trade can breach your drawdown limit even if you never close the position. Always confirm in writing with the firm how the trailing drawdown is calculated before paying the challenge fee.
Can I choose a one-step challenge if I'm a swing trader?
You can, but two-step is generally better suited to swing traders. The lower Phase 2 target (typically 5%) gives you a calibration window at reduced pressure. More importantly, swing traders hold positions for extended periods, which increases exposure to trailing drawdown breaches calculated on real-time equity. The second phase gives you time to identify whether the firm's drawdown calculation interacts badly with your typical holding duration before you're in the funded account proper. One-step's speed advantage is less relevant when your trades play out over days rather than minutes.
Is the challenge fee refunded if I pass?
At reputable firms such as FTMO, the challenge fee is refunded on the first funded payout. This significantly changes the effective cost of the challenge. Not all firms do this — if a firm does not refund the fee on first payout, you are paying a subscription for access to their evaluation with no offsetting return when you succeed. Confirm this policy explicitly before paying. The refund policy should be stated in the T&Cs; if it is not clearly stated, ask the firm in writing and save the response.
Am I trading real money in a prop firm challenge or funded account?
In most cases, no. Both the evaluation (challenge) and the funded account at the majority of retail prop firms operate on simulated demo environments that mirror live market prices. Your profit split is paid from the firm's fee revenue and risk pool, not from real market positions. This is legal and disclosed in the T&Cs of reputable firms, but it is rarely emphasised in marketing. The business model is dependent on challenge fee income exceeding payout demand — which is why firms collapse when too many traders succeed simultaneously. Some futures-focused firms (such as TopStep) do execute real orders for funded accounts; always confirm in writing whether your specific firm and account type trades live or simulated capital.
Sources & further reading
An independent, regulation-first guide to proprietary trading firms. Our editorial desk verifies every factual claim against primary sources and regulators' own publications, and never accepts payment for a better listing. Nothing we publish is financial or legal advice.