Two-Phase Challenge

A two-phase (or "two-step") challenge is the most common evaluation format. The first phase asks for a larger profit target to demonstrate skill; the second, called verification, asks for a smaller target to show the first result was repeatable rather than a one-off. Both phases enforce the same daily loss limit and overall drawdown, and most firms apply a minimum-trading-days requirement to each. Crucially, there is usually no profit reward for passing — the phases are unpaid auditions, and you only start earning once you reach the funded stage. One-phase and three-phase variants exist too; firms trade off a lower fee or faster funding against tighter or looser rules.

In plain English — A two-phase challenge breaks the evaluation into two consecutive stages. Phase 1 usually has a higher profit target to prove you can make money; Phase 2 (verification) typically has a lower target to prove you can do it consistently and not just on luck. The loss limits carry across both phases, and you must pass both before getting funded.

On a $100,000 two-phase challenge: Phase 1 needs +8% ($8,000), Phase 2 needs +5% ($5,000), and in both you must stay within a 5% daily loss ($5,000) and 10% max drawdown ($10,000).