Two-Step Evaluation

A two-step evaluation is the dominant retail prop-firm structure. The trader passes through two sequential phases. Phase 1 typically requires an 8–10% profit target. Phase 2 — sometimes called verification — typically requires a lower profit target (4–5%) but applies the same drawdown rules and often stricter consistency requirements.

The two-step format was popularized by FTMO and has since been copied across most major evaluation firms. The logic is that a single profit target can be cleared by luck or one outsized trade, while a second phase forces the trader to demonstrate the same skill again under similar conditions. Statistically this is a weak filter — but it converts well as a marketing structure and roughly halves the firm's payout exposure compared with a one-step at the same fee.

Phase 2 historically had a shorter time window than Phase 1 (e.g. 30 days vs 60 days), but most major firms have removed time limits entirely. Pass rates across both phases vary widely; published industry estimates put combined two-step pass rates between 5% and 15%, though firm-specific data is rarely audited.