Prop Trading Basics

30 Sep 2026

15 min read

What Is a 2-Step Prop Firm?

A 2-step prop firm is a proprietary trading firm that uses a two-phase evaluation process before a trader can progress to its post-evaluation or funded stage. Instead of completing a single evaluation, traders must successfully complete Phase 1 and Phase 2, with each phase having its own objectives and rules.

The exact structure varies between prop firms. Profit targets, maximum drawdown, daily loss limits, minimum trading days, consistency requirements, time limits, and trading restrictions can all differ.

Understanding how a 2-step prop firm challenge works is important before choosing a program. The number of phases is only one part of the comparison. Traders should also review the complete rules and consider whether they fit their trading strategy and risk management approach.

How the 2-Step Model Works in Short

A 2-step prop firm uses a two-stage evaluation model. Traders first complete an initial evaluation, usually called Phase 1, and then progress to Phase 2 if they meet the required objectives without violating the applicable rules.

A 2-step evaluation generally works like this:

1 Choose a challenge and account size.

2 Complete Phase 1 according to its trading rules.

3 Move to Phase 2 after successfully completing Phase 1.

4 Complete the objectives and rules for Phase 2.

5 Progress to the post-evaluation or funded stage, depending on the firm's structure.

The two phases may have different objectives. For example, a prop firm might set a higher profit target for Phase 1 and a lower target for Phase 2. Drawdown limits, minimum trading days, or other requirements may also change between phases.

There is no universal definition of what a 2-step challenge must look like. Each proprietary trading firm determines its own rules.

If you want to understand how the single-phase model differs, read our guide on What Is a 1-Step Prop Firm?

How Does a 2-Step Prop Firm Challenge Work?

A typical 2-step trading challenge has three main parts: Phase 1, Phase 2, and the post-evaluation or funded stage.

Phase 1: The Initial Evaluation

Phase 1 is the first stage of the evaluation. Its purpose is generally to assess whether a trader can reach a predefined performance objective while staying within the program's risk limits.

Common Phase 1 requirements can include:

• Profit target: A specified percentage or monetary objective that must be reached.

• Maximum drawdown: The maximum total loss allowed on the account.

• Daily loss limit: A limit on how much the account can lose within a trading day.

• Minimum trading days: A requirement to trade on a certain number of separate days.

• Time limit: Some programs require traders to complete the phase within a specific period.

• Trading restrictions: Rules may apply to news trading, overnight positions, weekend holding, or specific trading practices.

The trader must satisfy the applicable objectives without breaching the program's rules.

Reaching the profit target alone does not necessarily mean Phase 1 has been completed. A trader may also need to satisfy minimum trading-day, consistency, drawdown, or other requirements.

Phase 2: The Second Evaluation

After successfully completing Phase 1, the trader moves to Phase 2.

Phase 2 provides a second set of evaluation conditions. Depending on the prop firm, the requirements may be similar to Phase 1 or may be structured differently.

Common differences can include:

• A lower or different profit target

• The same or different drawdown limits

• Different minimum trading-day requirements

• Additional consistency requirements

• Different trading restrictions

The trader must complete Phase 2 while continuing to follow all applicable rules.

Passing Phase 1 does not automatically mean that the trader has passed the overall evaluation. Both phases generally need to be completed successfully.

Funded or Post-Evaluation Stage

After both phases have been completed, the next step depends on the prop firm's program.

A trader may move to a funded account or trader account, where they continue trading under a separate set of rules. The account may operate in a simulated environment, and eligible traders may receive rewards based on their performance.

Post-evaluation rules can include:

• Maximum drawdown

• Daily loss limits

• Trading restrictions

• Risk-management requirements

• Reward or payout conditions

• Minimum requirements before requesting rewards

Completing a 2-step challenge does not guarantee trading profits or rewards. Traders must continue to follow the applicable rules after the evaluation as well.

For a broader overview of the evaluation process, see how prop firm challenges work.

What Are the Typical Rules of a 2-Step Prop Firm?

There is no single standard for a two-step prop firm. However, several rules appear frequently across evaluation programs.

Profit Targets

Each phase may have its own profit target.

For example, a program could require one target in Phase 1 and a lower target in Phase 2. Other programs may use a different structure.

The important point is to check the target for each phase rather than assuming that the same objective applies throughout the evaluation.

Maximum Drawdown

Maximum drawdown defines how much the account can lose before the challenge is considered breached.

The calculation method is particularly important. A firm may use a fixed drawdown, trailing drawdown, or another methodology.

Two challenges with the same advertised percentage can therefore work differently depending on how the limit is calculated.

Daily Loss Limits

A daily loss limit restricts the amount an account can lose during a trading day.

The calculation may include realized and unrealized profit and loss, commissions, or other costs. Traders should also check when the daily limit resets.

Minimum Trading Days

Some 2-step challenges require traders to trade on a minimum number of days during each phase.

This requirement can affect traders who use lower-frequency strategies, so it is worth checking whether the minimum applies separately to Phase 1 and Phase 2.

Some programs also set conditions for which days count toward the minimum, such as a minimum profit on that day.

Time Limits

Some programs set a maximum amount of time for completing an evaluation. Others may not.

If there is a time limit, traders should check whether it applies to both phases and whether the clock starts again when moving from Phase 1 to Phase 2.

Consistency Rules

A consistency rule may require trading performance or profits to be distributed according to specific conditions.

The rule can apply during the evaluation, during a particular phase, or after the trader reaches the post-evaluation stage.

Because consistency rules vary significantly, traders should read the exact definition used by the prop firm.

News Trading

News trading rules determine whether traders can open, close, or modify positions around high-impact economic announcements.

Some programs allow news trading, while others restrict specific actions around designated events.

Overnight and Weekend Trading

Holding positions overnight or over weekends can also be restricted.

This is particularly relevant to traders who use swing or longer-term strategies. Always check the rules for the specific challenge rather than assuming that all 2-step programs have the same holding conditions.

What Are the Benefits and Considerations of a 2-Step Prop Firm?

A 2-step evaluation has several characteristics that traders should understand before choosing a program.

A structured two-phase evaluation

The evaluation is divided into two defined stages, each with its own targets and requirements. This creates a staged evaluation rather than a single set of objectives.

Lower targets per phase

Because the overall objective is split across two phases, each phase can carry a lower profit target. In many programs, this means more drawdown room relative to the target in each phase. For example, a phase with a 4.5% target and a 9% maximum drawdown allows twice as much drawdown as the profit it requires.

However, there are also practical considerations.

Two phases must be completed

A trader who passes Phase 1 still needs to complete Phase 2 before finishing the overall evaluation.

Requirements can change between phases

The objectives in Phase 2 may differ from Phase 1. Traders should understand both sets of rules before starting.

Risk limits still apply

Passing one phase does not remove drawdown or other risk requirements. Traders need to manage the account according to the rules throughout the evaluation.

Fees and reward structures vary

Challenge fees, funded-stage conditions, reward splits, and reward cycles depend on the specific firm and program.

A 2-step challenge should therefore be evaluated based on its complete structure rather than simply its number of phases.

2-Step vs. 1-Step Prop Firms

The key difference between the two models is the number of evaluation stages.

Factor	1-Step Prop Firm	2-Step Prop Firm
Evaluation stages	One	Two
Evaluation structure	One phase with its own objectives	Two phases with potentially different objectives
Profit targets	Usually one set of objectives	May have separate targets for each phase
Drawdown	Program-specific	Program-specific and may differ by phase

Factor	1-Step Prop Firm	2-Step Prop Firm
Minimum trading days	Depends on the program	Depends on the program and may apply to each phase
Time limits	Program-specific	Program-specific
Consistency rules	May or may not apply	May or may not apply and can differ by phase
Funded/post-evaluation stage	Follows the evaluation	Follows completion of both phases

The number of phases alone does not determine which structure is more suitable for a particular trader.

For a more detailed comparison, see 1-step vs. 2-step prop firm challenges.

What Should Traders Look for in a 2-Step Prop Firm? Before choosing a 2-step prop firm challenge, compare the complete rules.

Account size

Check which account sizes are available and whether the selected account size remains the same after completing the evaluation.

Profit target

Review the target for both Phase 1 and Phase 2. Do not assume that the two phases use identical targets.

Maximum drawdown

Understand both the percentage and the calculation methodology.

Daily loss limit

Check the daily limit, what is included in its calculation, and when it resets.

Minimum trading days

Find out whether there is a minimum number of trading days, whether the requirement applies separately to each phase, and which days count toward it.

Time limits

Check whether there is a deadline for completing either phase.

Consistency rules

Read the exact consistency requirement and determine when it applies.

News trading rules

If your strategy relies on economic releases, check the firm's restrictions around high-impact news.

Overnight and weekend holding

Swing traders should verify whether positions can remain open overnight or through weekends.

Trading platforms

Make sure your preferred platform is supported and check whether platform availability differs by program or jurisdiction.

Profit split and reward terms

Review how rewards are calculated, when they can be requested, and what eligibility requirements apply after completing the evaluation.

Challenge fee

Compare the fee for the specific account size and program rather than comparing account sizes alone.

Refund policy

Check whether the challenge fee is refundable and under what conditions.

Funded-stage rules

The evaluation rules are only part of the picture. Review the rules that apply after completing both phases as well.

BEM Funding's 2-Step Challenges

BEM Funding currently offers two 2-step challenge options: BEM Classic - Normal and BEM Classic - Swing. The current BEM challenges page describes BEM Classic - Normal as a standard 2-step challenge, while BEM Classic - Swing is positioned for longer-term trading with no swap fees and weekend holding across supported instruments.

BEM Classic - Normal

BEM Classic - Normal uses a two-phase evaluation consisting of Phase 1: Challenge and Phase 2: Discipline.

For the current program:

• Phase 1 profit target: 9% of the initial balance

• Phase 2 profit target: 4.5% of the initial balance

• Maximum daily drawdown: 4.5% of the initial balance in each phase

• Maximum drawdown: 9% of the initial balance in each phase

• Minimum trading days: At least 3 trading days in each phase

• Minimum daily profit requirement: A trading day counts toward the 3-day minimum only if it closes with at least 0.5% realized profit, based on the initial balance

• Consistency rule: Phase 2 does not apply a consistency rule

BEM Classic - Normal supports a broad range of markets, including Forex, Metals, Indices, and Cryptocurrencies. BEM currently lists leverage of up to 1:100 for Forex, with different limits applying to other asset classes. Instrument availability can vary by platform.

BEM Classic - Swing

BEM Classic - Swing also uses two evaluation phases, Phase 1: Challenge and Phase 2: Discipline, but its structure is designed for longer-term trading. Phase 1 has a 9% profit target, while Phase 2 has a 4.5% target. Both phases currently use a 4.5% maximum daily drawdown and a 9% maximum drawdown, with at least three trading days required in each phase. A trading day counts toward this minimum only if it closes with at least 0.5% realized profit, based on the initial balance. Phase 2 does not apply a consistency rule.

The Swing program allows overnight and weekend holding across supported instruments and operates on a swap-free basis. Its current terms also specify leverage limits by asset class.

For news trading, BEM's current Swing terms specify restrictions around high-impact news events, including a restricted window four minutes before and four minutes after an event. Trades opened at least eight hours before an event can be held through the event, subject to the applicable rules.

BEM's current challenges pages list account sizes of $5K, $10K, $25K, $50K, and $100K for the available challenge setup. BEM also states that its trading environment is simulated. Platform availability can vary by program, so check the current options on the challenge page before purchasing.

After completing a BEM 2-step evaluation, the reward schedule differs from BEM's 1-step programs, which use Reward on Demand. BEM's current FAQ states that 2-step programs use a standard 14-day reward cycle, with a 7-Day Reward Add-On available for applicable programs.

You can explore BEM Funding's 2-step challenges or see all BEM Funding challenges to compare the current programs and their rules. You can also learn how BEM Funding rewards work.

Because program rules can change, traders should review the current terms and challenge rules before purchasing or trading a challenge.