Immediate Snapshot of Two Step Prop Trading Firms
If you're a trader eyeing a prop firm funding model , the two step structure is the most common gateway. First, you tackle an evaluation phase - usually a $10,000 mini-account where you must hit a modest daily target and stay within risk limits. Pass that, and you graduate to a fully funded account .
How the progression works
- Step 1 - Evaluation : You trade a simulated $10,000 balance, prove consistency, then the firm offers a live account.
- Step 2 - Funded : The capital jumps to $50,000-$100,000 (sometimes more), and you keep the profits under a new split.
Profit split rates you'll see
Most two step prop trading firms start you at a 70/30 split - you keep 70 % of the net profit, the firm takes 30 %. Once you're in the funded tier, the split often flips to 80/20, rewarding you for proven performance. Some firms even push 85/15 for traders who consistently meet higher targets.
Speed of scaling
The key advantage is how fast you can scale. When you nail the daily profit target in Step 1, the firm usually upgrades you within days, not weeks. That means you could be trading a $100,000 account while still enjoying the 80/20 split, dramatically.
Step One: Evaluation Phase and Trading Rules
If you're aiming for a prop firm evaluation, the first step is all about rules, not magic. You will trade on a demo account that mimics the real deal, and every move you make is measured against the trading rules prop firm sets.
Two hard limits keep you honest. First, the daily loss limit is 5 % of your account balance - hit that and the test stops automatically. Second, the max position size per trade can't exceed 2 % of the account, so you never over-leverage a single idea.
Only a handful of indicators are allowed, which keeps the focus on price action. Commonly permitted tools include moving-average crossovers, the Relative Strength Index (RSI), and the Moving Average Convergence Divergence (MACD). You can mix them, but no exotic oscillators or custom scripts.
Here's a quick EUR/USD example that fits the evaluation criteria. You watch the 20-period simple moving average (SMA) on a 15-minute chart. When the price breaks above the SMA and the RSI is above 55, you open a long position sized at 1 % of the account. The stop is placed a few pips below the SMA, targeting a risk-reward of 1:2. If the trade moves in your favor, you exit at the pre-set profit target, staying well within the daily loss cap.
One more rule to watch: you must keep at least 0.5 % of account equity untouched during the entire test. That buffer protects you from accidental over-drawdown and signals to the prop firm you can manage risk.
Stick to these basics, and the prop firm evaluation becomes a matter of discipline, not guesswork.
Step Two: Full Funding and Scaling Plan
If you've nailed that 10% profit target, the prop firm scaling kicks in. Most programs jump your account from $10,000 straight to $30,000, giving you three times the buying power. That's the moment the funded trader program really shows its teeth.
What changes when you scale?
- Capital boost: a three-fold increase means you can trade larger positions, but you also need to respect a higher risk ceiling.
- profit split upgrade : many firms move you from a 70/30 split to an 80/20 split, so you keep more of the upside.
- Risk rule shift: the max daily loss often rises to 7% of the new account size, instead of the tighter 5% you were used to on the starter account.
For a concrete example, think about the GBP/JPY pair. Its volatility makes it a favorite for prop firm scaling. With a $30,000 account, a 0.5% position is $150, versus just $50 on the $10,000 account. If you catch a typical GBP/JPY swing of 100 pips, that could translate to roughly $150 profit, enough to push you toward the next scaling tier.
Remember, the key is to let the larger account breathe. Stick to the new daily loss limit, keep your trade size proportional, and watch the profit split climb. The funded trader program rewards disciplined scaling, so you'll see your earnings grow without blowing up the account.
Core Technical Indicators Favoured by Two Step Firms
If you trade with a prop firm, you quickly learn that simplicity wins. Most two-step firms push traders toward moving averages and Bollinger Bands, because they cut through noise and give a clear picture of trend direction. A 20-period SMA on EUR/USD, for example, will show you whether the pair is riding a bull wave or slipping into a bear drift. Pair that with Bollinger Bands, and you instantly see over-extension - price touching the upper band often flags a short-term pull-back, while the lower band hints at a bounce.
- Moving averages: smooth out price, help you lock onto the dominant trend, essential for any trading strategies prop firms favor.
- Bollinger Bands: highlight volatility squeezes; a narrowing band can precede a breakout, a key signal for technical indicators prop trading.
When you need to spot overbought or oversold zones, the Stochastic oscillator is your friend. Set it to 14-3-3 on EUR/USD and watch the 80-level; a cross down from there often signals the market is ripe for a reversal. It's a quick way to avoid riding a wave past its peak.
Risk management is where ATR stop-loss meets Fibonacci retracements. Calculate the 14-day ATR, then place your stop a multiple (often 1.5x) away from entry. Next, draw Fibonacci levels from the recent swing high to low; if price respects the 61.8% retracement, you know your stop sits in a sensible zone.
One caveat: many firms forbid exotic tools like Ichimoku clouds. They consider them “non-standard” and worry they complicate the evaluation process. Stick to the core set above, stay disciplined, and you'll fit right into the two-step model.
Risk Management Protocols Specific to Two Step Programs
If you're a beginner in a two-step prop firm track, the first rule you'll see is the 1% risk per trade limit. That means you can't put more than 1% of your allocated capital on any single position during the evaluation phase. Once you clear the first step and move into the funded stage, the rule relaxes to 1.5% per trade, giving a bit more breathing room while still keeping risk management prop trading principles intact.
Daily loss limits and position closure
Both steps share a hard daily loss ceiling. You must close every open position before the prop firm loss limits are triggered. In practice, that means monitoring your equity line throughout the day and exiting early if you're approaching the threshold, rather than waiting for a market swing to wipe you out.
Trailing stops and volatility protection
A common tool is a trailing stop set at 2xATR. The Average True Range captures recent price swings, so using double that value lets you lock in gains while giving volatile pairs enough room to breathe. For example, on EUR/USD you might see a tighter stop because of its deep liquidity, whereas GBP/JPY's wild moves often require a wider stop distance to avoid premature exits.
- EUR/USD - high liquidity, lower volatility - tighter 2xATR trailing stops work well.
- GBP/JPY - lower liquidity, higher volatility - set broader 2xATR stops to stay in the trade.
Keeping these mandatory risk controls front and center helps you stay within the prop firm loss limits and builds a solid foundation for long-term success.
Liquidity vs Volatility: Instrument Choice in Two Step Firms
If you're a beginner looking at the first evaluation step, EUR/USD should be your go-to pair. Its deep EUR/USD liquidity means spreads stay tight, slippage is rare and you can hit consistent profit targets without chasing the market. You'll notice the price moves in smaller, more predictable increments, which is perfect when the prop firm's rules penalise large drawdowns.
When you move into the scaling phase, the game changes. GBP/JPY brings the kind of GBP/JPY volatility that prop firms love for bigger swing potential. The pair can fire off large moves in minutes, so if you can tolerate a wider risk window, you'll capture more profit per trade. Think of it as swapping a steady jog for a short sprint.
Here's a simple trade plan that blends both worlds and keeps your risk profile balanced:
- Risk allocation: 60% of your total risk budget goes to EUR/USD trades, 40% to GBP/JPY.
- Position sizing: Use a smaller lot size on EUR/USD to stay inside tight spread limits, increase the lot on GBP/JPY to match the 40% risk share.
- Entry criteria: For EUR/USD, look for confluence of a 50-period moving average and a bounce off a major support level. For GBP/JPY, wait for a breakout above a recent high or a clear momentum candle.
- Stop loss & target: EUR/USD stops are usually 10-15 pips, targets 20-25 pips. GBP/JPY stops can be 30-40 pips, targets 70-90 pips, depending on volatility.
- Review: After each week, check the win-rate of each instrument. Adjust the 60/40 split if one pair is consistently outperforming the other.
By pairing the liquidity of EUR/USD with the volatility of GBP/JPY, you give yourself a flexible toolset that fits both evaluation and scaling steps in any prop firm challenge.
Advantages and Drawbacks of Joining a Two Step Prop Firm
If you're eyeing a fast-track to professional trading, a two step prop firm can feel like a shortcut. The model splits the journey into an evaluation phase and a funded phase, so you only pay for the chance to prove yourself before you start earning real profit.
Pros - the two step prop firm benefits
- Low initial capital - you usually deposit a modest fee instead of risking thousands.
- Clear progression path - the rules for moving from evaluation to funding are written down, so you know exactly what to hit.
- Transparent profit splits - most firms advertise a fixed split (e.g., 80/20), so you can calculate your earnings ahead of time.
- Quick scaling - once you meet the profit target, many firms increase your account size within weeks.
Cons - pros cons prop trading firms you should watch
- Strict daily loss limits - a single bad day can reset your evaluation or even close it.
- Limited instrument lists - some firms only let you trade a handful of forex pairs or futures.
- Evaluation fees are non-refundable - you pay even if you don't pass the first step.
- Heavier rule enforcement - you must obey max position sizes, stop-loss placements, and trade-frequency caps.
For disciplined traders, the two step model can accelerate career growth because it forces you to adopt solid risk management early on. You get a taste of real-money pressure without risking the full capital that a traditional prop desk would require.
Before you sign up, compare several firms' scaling timelines, fee structures, and profit-split ratios. A side-by-side table can reveal hidden costs and show which firm aligns best with your trading style.