What is a One-Step Challenge in Prop Trading? Pros and Cons

 

In proprietary trading, prop firms let traders use their money to trade. These firms have evaluation programs to check the skills of traders. One popular option is the one-step challenge, which is a simpler and quicker way to test traders. These firms are different from traditional firms that have multi-step evaluation programs as well as more complex and time-consuming. One-step challenge firms simplify this process and make it faster and more accessible. Let’s see in detail about the concept of one-step challenges, their advantages, and disadvantages.  

What is a One-Step Challenge in Prop Trading?

A proprietary trading evaluation program known as a one-step challenge requires traders to achieve specific trading goals in a single phase. If they succeed, they can access the firm’s capital. Now traders do not need the multiple stages for evaluation. This is a faster option for experienced traders who want funding quickly.

Key features of a one-step challenge:

• Trading Goals: Traders must reach profit targets within a set time.

• Risk Rules: They follow rules like limits on daily losses and overall drawdowns.

• Short Duration: This evaluation has one phase that usually takes a few weeks to a few months and makes it quicker than multi-step programs.

Pros of a One-Step Challenge in Prop Trading

Faster Access to Capital

As one-step challenge firms consist of a single phase then traders can showcase their skills and get funding much more quickly than in multi-step programs. This speed is especially beneficial for experienced traders who have confidence in their skills and they can easily prove it.

Simplified Evaluation Process

The absence of multiple stages also reduces complexity and eliminates the need to repeatedly prove trading consistency. This ease of access frequently attracts traders who want an easy evaluation path.

Cost-Effective

As firms charge evaluation fees then one-step challenge prop firms have lower upfront costs as compared to multi-step evaluations. Additional stages can be costly and time-consuming, so traders avoid paying for them.

Encourages Skill Demonstration

One-step challenges focus on immediate performance and reward traders who can efficiently achieve goals and adjust to changing market conditions.

Open and transparent guidelines and goals

The majority of private companies that provide one-step challenges give traders specific guidance so they are aware of the criteria and have realistic expectations. 

Cons of a One-Step Challenge in Prop Trading

High Pressure to Perform

The single phase of the challenge can create more pressure as traders must meet objectives without the opportunity for recovery in the next stages. Not every trading style will benefit from this level of intensity.

Limited Time to Prove Consistency

One-step challenges prioritize short-term performance over long-term consistency. Although this strategy rewards experienced traders, it could ignore individuals who profit from consistent, long-term gains.

Not Ideal for beginners

Due to the high-performance standards and short timelines, one-step challenges are not a good option for beginner traders who are in their learning phase. 

Stricter Risk Management Requirements

Firms apply stricter risk management guidelines when there is just one stage to complete. Regardless of the amount of profit made, disqualification is possible from even minor violations of these regulations. 

Reduced Learning Opportunities

Multi-step programs provide feedback at each stage that helps traders refine their skills. On the other hand, one-step challenges provide fewer opportunities for growth and improvement during the evaluation process.

How to Succeed in a One-Step Challenge

Master Your Trading Strategy: Make sure your strategy works well in different market conditions. The best thing to do is start practice in a demo account so you can better understand how to refine your strategy before taking the challenge.

Understand the Rules: Carefully read and understand the firm’s rules like their limits on drawdowns, leverage, and position sizes. If you follow these rules then there are more chances to get success in evaluation. 

Focus on Risk Management: Risk is a major factor that can break your account so protect it by using stop-loss orders, managing your daily risk, and avoiding overleveraging. 

Stay Mentally Strong: Challenges are always stressful but it’s important to keep yourself calm. Stick to your plan, avoid emotional trading, and don’t allow fear or greed as these can impact your decisions.

Use Analytics Tools: Many firms provide tools to monitor your performance. Use these tools to monitor your strengths and weaknesses, and change your plan accordingly to improve yourself during the challenge.

Plan for the Timeframe: One-step challenges have strict deadlines and you must complete your evaluation in this time period. So create your clear trading schedule accordingly to ensure you meet targets in a given time and without making any mistakes.

Stay Flexible: Market conditions can change quickly so you must be prepared to make new strategies when needed. However, it is important to stay within the rules of the challenge.

Popular Proprietary Firms Offering One-Step Challenges

Some of the best one-step challenge firms include FTMO which is also known for its trader-friendly evaluation process and supportive environment. FundingPips provides competitive profit splits and flexible trading conditions to pass a funded account challenge. Topstep is also included in top prop firms and focuses on futures trading with an emphasis on risk management.