Prop firm evaluation types: 1-step, 2-step and instant funding

Forex and Futures prop firms have come a long way in the last few years. It’s no longer just one evaluation type that can get you funded, traders have multiple options to choose from.

Let’s go over the evaluation types prop firms have to offer, and their pros and cons.

Key Takeaways

• Before you can start trading with a large capital, you need to pass a prop firm evaluation.
• There are two to three challenge tiers with the cheapest ones having stricter rules and profitability requirements.
• Instant funding is available for those who wants to skip the evaluations. However, those who choose this option must follow strict trading rules.

What Exactly is a Prop Firm Evaluation?

A prop firm evaluation is a challenge account traders can purchase for a certain amount of money, which in turn gives them capital to trade with, if they successfully pass their evaluation phase.

Instead of depositing funds into a brokerage account, prop firms let you undertake and pass a challenge, allowing you to trade anywhere from 4 to 6 figures in funded capital.

Types of Evaluations

Prop firms used to have only one type of evaluation back in the day. But as the prop firm industry developed, more options were introduced, and traders can now choose from multiple evaluation types, according to their preferences.

N.B. We will be using “Step” and “Phase”, as well as “Evaluation” and “Challenge” interchangeably throughout this article.

1-Step Evaluation

1-Step Evaluations are marketed as easier to pass because of it does not have a 2nd evaluation phase. But this is often not the case, since traders have less Maximum and Daily Drawdown to work with, to compensate for the lower Profit Target.

For example, a 1-Step Evaluation with a 10% Profit Target will have a 6% Maximum and a 3% Daily Drawdown, compared to 10% and 5% in a 2-Step Evaluation.