# What is Two-step challenge?

> A two-step challenge is an evaluation split into two phases, usually a higher profit target first and a lower one in a verification phase, before simulated funding.

- Source: https://pipvalley.com/glossary/two-step-challenge
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm, the two-step challenge is the classic structure popularized by the early forex prop firms. Phase 1 (often called the challenge) carries the larger profit target; phase 2 (often called verification) repeats the test with a smaller target and the same loss limits. Only after both does the trader receive a simulated funded account.

The second phase exists to filter out traders who passed phase 1 on one lucky run. It also gives the firm a second, cheaper data point on the trader's behavior before payout liability begins. Some firms refund the fee with the first payout to offset the extra friction.

Phase 2 is sometimes called the verification phase, phase two, or the second step. Pick one name and use it everywhere the trader will see it.

## Why it matters

Two-step programs are still the most familiar format to forex traders, so they are an easy anchor product on a pricing table. The extra phase lowers how many accounts reach the funded stage, which supports a lower fee, but it also adds time and support questions. The website must state both targets and whether the rules change between phases.

## Example

Phase 1: 8% target. Phase 2 (verification): 5% target. Same 5% daily and 10% maximum loss limits in both. Illustrative figures only.