2-Step Prop Firm Challenge Explained: Targets, Limits and Static Drawdown
Two targets, wider limits and a floor that does not trail. How phase 1 and phase 2 work on a 2-Step challenge, in dollars on a $100K simulated account.
OctoFunded Trading DeskUpdated ยท 8 min read
A two step prop firm challenge is an evaluation with two phases: a larger profit target first, then a smaller one, with the same loss limits applying in both. The extra phase takes longer, and in exchange the limits are usually the widest of any program type.
This guide explains the OctoFunded 2-Step in depth: how phase 1 and phase 2 work, why a static drawdown changes your sizing, and what the rules look like on a $100K simulated account. For the basics, read what a prop firm challenge is.
Key takeaways
- Two targets: 10% in phase 1 and 5% in phase 2, which is $10,000 then $5,000 on $100K.
- The widest limits at OctoFunded: a 5% daily loss limit and a 10% max loss.
- The floor does not trail: with a static drawdown, profit adds room instead of lifting the floor.
- No deadline: no time limit on either phase.
- The fee comes back: on the 2-Step, the fee is refunded with the first payout.
What is a two step prop firm challenge?
A two step prop firm challenge, often called a 2 step evaluation, tests the same trader twice under the same loss limits. Phase 1 shows you can reach a meaningful target. Phase 2 asks for a smaller target, which tests whether you can repeat the process without the pressure of a large number.
Compared with a single phase test, the trade-off is time for room. You trade two phases, and in return the daily loss limit and max loss are wider and, at OctoFunded, the max loss is static.
If you are deciding between program types, compare all three programs first. This article goes deep on the 2-Step only.
What are the OctoFunded 2-Step rules?
The OctoFunded 2-Step has two targets, two loss limits and a fee refund. Here they are with their dollar values on $100K.
| Rule | 2-Step | On an illustrative $100,000 simulated account |
|---|---|---|
| Phases | 2 | Phase 1, then phase 2 |
| Phase 1 target | 10% | $10,000 of profit |
| Phase 2 target | 5% | $5,000 of profit |
| Daily loss limit | 5% | $5,000 as a share of $100,000 |
| Max loss | 10% static | $10,000 below the starting balance: a $90,000 floor |
| Time limit | None | No deadline on either phase |
| Fee refund | With the first payout | The fee comes back with the first payout |
After the challenge, payouts use an 80% profit split from the first payout, on a 14-day cycle, in USDT or USDC on-chain with a public transaction hash, subject to the program rules. Expert Advisors are allowed. The OctoFunded program rules explain exactly how each limit is measured.
How do phase 1 and phase 2 work at a prop firm?
In phase 1 you aim for 10% without breaking the loss limits. Once you reach it, you move to phase 2 and aim for 5% under the same 5% daily and 10% max loss. After phase 2, you move to a funded account on simulated capital.
The two phases call for slightly different thinking.
Phase 1: 10% with full room. $10,000 on $100K is a real target, but you have a $90,000 floor and no deadline. The risk in phase 1 is not running out of room; it is sizing up to get there faster.
Phase 2: 5% with the same limits. Half the target with the same limits means the ratio of room to target doubles. On $100K, you need $5,000 while you can lose up to $10,000. Some traders lower their risk per trade in phase 2 because the target no longer needs the same pace.
| Item on $100,000 | Phase 1 ($) | Phase 2 ($) |
|---|---|---|
| Target | $10,000 | $5,000 |
| Max loss | $10,000 | $10,000 |
| Room to target ratio | 1 to 1 | 2 to 1 |
| Daily limit | $5,000 | $5,000 |
With no time limit on either phase, the extra phase is a question of patience. See challenges with no time limit for why that changes behaviour.
Why does a static drawdown matter?
A static drawdown matters because the floor does not follow your highs, so every dollar of profit becomes extra room. Under a trailing floor, your room stays roughly the same however much you make.
Here is the same equity path under the 2-Step's 10% static max loss, compared with an illustrative trailing floor at the same 10% distance (the trailing column is an example for contrast, not a rule of any OctoFunded program).
| Closing balance ($) | Static floor ($) | Room, static ($) | Example trailing floor ($) | Room, trailing ($) |
|---|---|---|---|---|
| $100,000 | $90,000 | $10,000 | $90,000 | $10,000 |
| $103,000 | $90,000 | $13,000 | $93,000 | $10,000 |
| $106,000 | $90,000 | $16,000 | $96,000 | $10,000 |
| $102,000 | $90,000 | $12,000 | $96,000 | $6,000 |
On the last row, a $4,000 pullback from the $106,000 high leaves $12,000 of room under the static floor and $6,000 under the trailing one. That is why swing traders with deep pullbacks often look at a static floor first. For more detail, read static vs trailing drawdown.
How does the 5% daily limit fit with the static floor?
The 5% daily loss limit is $5,000 per day on a $100K simulated account, measured as a share of $100,000. It works next to the static floor: one rule caps a single bad day, the other caps the total damage.
| Risk per trade ($) | Losers before $5,000 is reached | Bad days of 3 losers before the $90,000 floor |
|---|---|---|
| $500 | 10 | 6 (at $1,500 per day, floor reached on day 7) |
| $750 | 6 | 4 (at $2,250 per day, floor reached on day 5) |
| $1,000 | 5 | 3 (at $3,000 per day, floor reached on day 4) |
The daily limit is the one that ends accounts in a single session, so check which balance it is measured from in how the daily loss limit is measured. A personal daily stop at about half the limit, $2,500 here, keeps one session from deciding the phase.
Worked example: phase 1 and phase 2 on $100K
Here is an illustrative trader on a $100K 2-Step simulated account. They risk $750 per trade in phase 1 and $500 in phase 2. For phase 2, this example assumes a fresh $100,000 balance; check the program rules for how phase 2 starts.
Phase 1 (target $10,000)
| Week | Weekly result ($) | Balance ($) | Room above $90,000 ($) |
|---|---|---|---|
| 1 | +$3,000 | $103,000 | $13,000 |
| 2 | -$4,500 | $98,500 | $8,500 |
| 3 | +$5,000 | $103,500 | $13,500 |
| 4 | +$6,500 | $110,000 | $20,000 |
Week 2 was a $4,500 losing week. Under the static floor the account still had $8,500 of room. Under a 10% trailing floor in the same position, the floor would have risen to $93,000 after week 1, leaving $5,500. The static floor gave this trader space to recover.
Phase 2 (target $5,000, example fresh balance)
| Week | Weekly result ($) | Balance ($) | Room above $90,000 ($) |
|---|---|---|---|
| 1 | +$2,000 | $102,000 | $12,000 |
| 2 | -$1,000 | $101,000 | $11,000 |
| 3 | +$4,000 | $105,000 | $15,000 |
Lower risk per trade made the phase 2 path smoother. This is one path that fits the rules; it does not suggest that any challenge will reach either target.
Who is a 2-Step challenge suited to?
A 2-Step tends to suit traders who need room more than speed.
- You swing trade with wide stops and expect pullbacks of several percent before a move pays.
- Your worst day is sometimes 3% or more, which fits a 5% limit better than a tighter one.
- Your profit comes in bursts, with flat or losing weeks between them.
- You prefer a fixed floor that profit pushes further away.
- You can plan two phases. A phase-by-phase risk plan helps you pace each target.
If your results are very even and you want one target only, a single phase challenge may fit better.
FAQ
What is a two step prop firm challenge?
It is an evaluation split into two phases. You reach a profit target in phase 1, then a smaller target in phase 2, while staying inside the loss limits in both, before you move to a funded account with simulated capital.
What are the OctoFunded 2-Step targets?
The 2-Step has a 10% target in phase 1 and a 5% target in phase 2. On a $100K simulated account that is $10,000 and then $5,000.
What does a 10% static drawdown mean on $100K?
A static drawdown does not trail your highs. With a 10% max loss on a $100K simulated account, the limit is $10,000 below the starting balance, so profit adds room above the floor instead of moving the floor up.
Is there a time limit on the 2-Step phases?
No. The OctoFunded 2-Step has no time limit, so neither phase has a deadline.
Is the 2-Step fee refunded?
Yes. On the OctoFunded 2-Step, the fee is refunded with the first payout, subject to the program rules.
Take the room, then take your time
A 2-Step trades a second phase for wider limits and a floor that does not trail. OctoFunded publishes the 2-Step rules before you buy, on simulated capital, with a one-time fee and no time limit.
