A prop firm challenge is a paid test: reach a profit target without breaking the loss limits, and the firm gives you a funded account. Two-step challenges split the target into two phases with more room to lose, one-step challenges use a single target with tighter limits, three-step programs use three small targets at a lower price, and instant funding skips the test for a higher price and stricter funded rules.
The four formats at a glance
The formats differ in how many targets you must hit and how much room you get before the account is closed. Typical settings for CFD (forex) programs:
| Format | Profit target | Daily loss | Max loss | Drawdown | $100K list price |
|---|---|---|---|---|---|
| 2-step | 8-10%, then 4-5% | 4-5% | 8-10% | Usually static | About $400-$600 |
| 1-step | 8-10%, sometimes more | 3-4%, sometimes none | 4-10% | Often trailing or end-of-day trailing | About $400-$600 |
| 3-step | About 5-6% per phase | About 2-4% | About 3-5% | Usually static | Often below 2-step |
| Instant | None | 3-5% or none | 4-8% | Usually trailing | Highest per $1,000 of account |
Minimum trading days range from zero to about five at most firms, and most CFD firms no longer set time limits. Prices are list prices before discounts. Discount codes are common, so check current offers and compare live programs on the challenges page.
2-step challenges
A 2-step challenge is the industry standard: a larger target in phase one, a smaller target in phase two, and the same loss limits in both. The usual setup is a 10% or 8% target, then 5% or 4%, with a 5% daily loss limit and a 10% maximum loss that doesn't move.
On a $100,000 account with a 10% / 5% program, you need $10,000 profit in phase one, then $5,000 in phase two. Your floor stays at $90,000 the whole time, and you can lose up to $5,000 in any one day.
Pros:
- Static drawdown is easy to track, and every profit adds to your room.
- More total room to lose than most other formats.
- The fee is often refunded with your first payout.
Cons:
- Two hurdles take longer, and you can fail phase two after passing phase one.
- Some firms apply minimum trading days in each phase.
Best for: most traders, and especially first-time buyers. See our ranking of the best 2-step prop firms.
1-step challenges
A 1-step challenge has one profit target, and firms usually balance that with tighter loss limits, a trailing drawdown or a best-day rule. A common setup is a 10% target with a 3-4% daily loss limit and a maximum loss between 4% and 10%, often trailing your highest balance or measured at the end of each day.
The faster path has a cost. A 10% target with a 6% trailing drawdown means you must make $10,000 before you ever give back $6,000 from your peak, and open profit you give back eats into that room. Many 1-step programs also cap your best day, for example at 50% of total profit, so one big day can't carry the whole target.
A simple way to compare difficulty is the ratio of target to maximum loss:
| Program | Target | Max loss | Target ÷ max loss |
|---|---|---|---|
| 2-step, phase 1 | 10% | 10% static | 1.0 |
| 2-step, phase 2 | 5% | 10% static | 0.5 |
| 1-step | 10% | 6% trailing | 1.7 |
| 3-step, each phase | 6% | 5% static | 1.2 |
A higher ratio means you need more profit for each dollar of room, and a trailing limit makes the same ratio harder still.
Best for: disciplined day traders who reach targets quickly and rarely let winners turn into losers. See the best 1-step prop firms.
3-step challenges
A 3-step challenge splits the target into three small ones, usually around 5-6% each, with a tight maximum loss and often the lowest upfront price. The three targets add up to roughly 15-18%, and the maximum loss is often around 5%, so this format rewards patient, low-risk trading.
Things to check:
- Some 3-step programs charge an activation fee when you pass, so the real price is the fee plus activation.
- Three phases mean three chances to fail and more time before your first payout.
- Funded accounts may start smaller or with a lower profit split.
Best for: patient traders on a tight budget who already trade with small risk per trade.
Instant funding
Instant funding skips the evaluation: you pay once and trade a funded account from day one, but you pay more per dollar of account size and accept tighter rules. Typical rules are a trailing maximum loss of 4-8%, a daily loss limit of 3-5% (some programs have none), and often a consistency rule or a minimum number of trading days before payouts. Some firms also keep a profit buffer, so the first few percent of profit can't be withdrawn.
The price gap is easy to miss because instant accounts are often sold in small sizes. A $5,000 instant account for $100 costs $20 per $1,000 of account size. A $100,000 two-step challenge for $500 costs $5 per $1,000. You save the time of the evaluation and pay for it upfront.
Best for: traders with a long, stable record who want payouts sooner and accept stricter rules. See the best instant funding prop firms.
Futures evaluations work differently
Futures prop firms usually charge a monthly fee, use a dollar-based trailing or end-of-day drawdown, and add an activation fee or extra payout conditions once you pass. For example, a $50,000 evaluation might ask for $3,000 profit with a $2,000 trailing drawdown, and many futures programs add a consistency rule to the evaluation or to payouts. Treat them as a separate product from CFD challenges, and see our drawdown guide for how end-of-day trailing works.
Which format is easiest to pass?
No format is easiest for everyone; what matters most is whether the loss limits fit your normal drawdown. Few firms publish pass rates, and almost none split them by format. Topstep reports that 16.8% of the evaluations started with it in 2025 were completed, and a 2024 multi-firm dataset from FPFX Tech found that 14% of traders passed. On PropGrade every pass rate is labeled Reported, Third-party or Estimate, and you can compare them on our highest pass rates list.
Use your own history. If your worst losing streak in recent months cost 6% of the account, a program with a 6% trailing limit is a bad match no matter how low the target looks. Whatever you choose, remember that a challenge is a paid product and most people who buy one don't pass.
Costs beyond the list price
The true cost of a challenge includes resets, add-ons, activation fees and repeat attempts, not just the list price. Check these before you buy:
- Refundable fee: many firms refund the fee with your first payout, some only with a later one.
- Resets and retries: a discounted restart after a breach. Cheap per attempt, expensive in total if you rely on them.
- Add-ons: paid options for a higher split, faster payouts or no minimum days.
- Activation fees: common at futures firms and in some 3-step programs.
- Subscriptions: monthly futures fees keep running until you pass or cancel.
Our list of the cheapest prop firms sorts by list price and shows each firm's grade, so a low price doesn't hide a weak payout record.
How to choose your format
Choose the format that matches your trading style and your largest normal drawdown, then compare firms within it.
- First challenge: a 2-step with static drawdown and no time limit. See prop firms for beginners.
- Fast day trader with tight stops: a 1-step, if you rarely give back open profit.
- Small budget, patient style: a 3-step, counting any activation fee.
- Proven record, wants payouts sooner: instant funding, after reading the consistency and payout rules.
- Swing trader: any format that allows overnight and weekend holding. See prop firms for swing trading.
When you have a shortlist, put the programs side by side in Compare.
FAQ
Is a 1-step or 2-step challenge better?
Neither is better for everyone. A 2-step gives you more room to lose and usually a static drawdown, but you must pass twice. A 1-step is faster but usually has tighter or trailing limits, so it suits traders who control drawdown very well.
Why is instant funding more expensive?
The firm skips the test that filters out most traders before funding, so it charges more upfront and sets tighter rules on the funded account. Per $1,000 of account size, instant funding often costs several times more than a 2-step challenge.
Do prop firm challenges have time limits?
Most CFD firms have dropped time limits, so you can take as long as you need. Some programs, especially futures evaluations, still use a fixed window such as 30 days. Check the program page before you buy.
Is the challenge fee refundable?
At many firms, yes, but only with your first payout or a later one, not when you pass. If you never reach a payout, you don't get the fee back. Some cheaper programs offer no refund at all.
What happens if I fail a challenge?
The account is closed and the fee is lost. Many firms offer a discounted reset or retry. Before buying again, find the rule that ended the account and check whether the program fits your style.
Can I hold more than one challenge at a time?
Usually yes, up to the firm's maximum allocation per trader. Some firms treat identical trades across accounts as one strategy and cap the total, so read the allocation rules first.