Is It Harder to Pass Phase 1 or Phase 2 in Prop Firm Challenges?

Phase 1 vs Phase 2: Where Do Prop Firm Traders Struggle Most?

Passing a two-phase prop firm challenge is the gateway to managing serious capital. But many traders wonder: Is it harder to pass phase 1 or phase 2? The answer isn’t obvious—and depends on more than just profit targets or time limits. Here’s a data-driven look at the real challenges, firm by firm, and how to maximize your odds.

What Changes from Phase 1 to Phase 2?

At most firms, both phases require you to trade with discipline and consistency. But the specifics—profit targets, timeframes, and psychological hurdles—differ in ways that matter. Here’s what typically changes:

• Profit Target: Phase 1 usually demands a higher profit % than Phase 2.
• Time Limit: Phase 1 often has less time (e.g., 30 days) than Phase 2 (e.g., 60 days), but not always.
• Drawdown Rules: Usually identical across both phases.
• Psychological Pressure: Phase 2 can feel higher-stakes—one misstep could cost you the whole challenge fee.

Let’s break down the real numbers for the leaders in the space.

Direct Comparison: Leading Prop Firm Challenge Rules

Key Takeaways from the Numbers

• Phase 1 is always harder by profit target—usually double the % of Phase 2 (e.g., FTMO: 10% vs 5%).
• Drawdown rules don’t ease up—if you’re at risk in Phase 1, you’re at risk in Phase 2.
• Time pressure varies: FTMO and FundedNext give you more time in Phase 2, but E8, The5ers, MyFundedFX, and Blue Guardian have no time limit for either phase.
• Retake policies matter: Unlimited retries (E8) or free retakes if breakeven (FTMO, Blue Guardian) can reduce pressure in both phases.

Why Do Most Traders Fail—Phase 1 or Phase 2?

Most traders fail in Phase 1. Here’s why:

• Higher profit target: 10% in 30 days (FTMO, FundedNext) is tough, especially with a 5% daily drawdown.
• Time pressure: The clock is ticking, so traders over-leverage or overtrade and violate risk rules.
• No margin for error: A single bad day can end the challenge (e.g., lose 5% in one day on FTMO = fail).

By contrast, Phase 2 profit targets drop to 5% (or 6% at some firms), and you get double the time at FTMO or FundedNext, or unlimited time at firms like E8 and The5ers. The pressure to "go big or go home" is lower.

But Phase 2 Has Its Own Traps

• Psychological pressure: After beating Phase 1, traders get overconfident or nervous about losing their progress.
• Drawdown resets: You start fresh, but the drawdown % stays the same—so one mistake can still wipe you out.
• Complacency: With a lower target and more time, some traders get careless or bored, leading to rule breaches or missed targets.

Real-World Examples: Phase 1 vs Phase 2 Difficulty

FTMO

• Phase 1: 10% profit in 30 days, 5% daily/10% max drawdown
• Phase 2: 5% profit in 60 days, same drawdown rules

FTMO’s 10% target in Phase 1 is one of the highest in the industry. If you’re trading a $100K account, you need $10,000 profit in 30 days—while never losing more than $5,000 in a day or $10,000 overall. In Phase 2, you only need $5,000 in profit over 60 days, and you can take your time. FTMO data and community reports suggest 70-80% of failures happen in Phase 1—but Phase 2 is not a free pass. Many traders fail by breaking the daily loss rule late in Phase 2.

E8 Markets

• Phase 1: 8% profit, no time limit, 5% daily/8% max drawdown
• Phase 2: 5% profit, no time limit, same drawdown

No time pressure should make E8 easier. Yet, the 8% target with only 8% max drawdown means you have to trade with tight risk. The unlimited retries policy helps, but the drawdown rules are unforgiving—especially for high-volatility traders.

The5ers

• Phase 1 & 2: 6% profit each, unlimited time, 3% daily/6% max drawdown

The5ers has one of the lowest profit targets, but also the tightest drawdown—on a $100K account, a 3% daily cap means $3,000. The low targets sound easy, but the risk of a single big loss is high. Unlimited time helps you go slow, but you must be very consistent.

MyFundedFX

• Phase 1: 8% profit, unlimited time, 5% daily/8% max drawdown
• Phase 2: 5% profit, unlimited time, same drawdown

Unlimited time makes both phases more about discipline than speed. Still, most traders fail Phase 1 due to the higher profit target and the temptation to rush for a quick win.

Hidden Trade-Offs and Non-Obvious Risks

• High profit targets + tight drawdown = high fail rate. FTMO’s 10% target with 10% max drawdown is mathematically tough: You must win more than you lose, quickly.
• Unlimited time isn’t always easier. Some traders lose discipline and overtrade, running into the same drawdown wall.
• Retake policies can encourage risky behavior. If you get unlimited retries, you might take on more risk—leading to repeated failures.
• Psychological fatigue in Phase 2. After the grind of Phase 1, traders often relax in Phase 2 and let their guard down, resulting in rule breaches.
• Rule complexity increases error risk. FundedNext, for example, offers a 15% profit share during the challenge, but only if you follow extra conditions. More rules mean more traps.

What Should You Actually Do?

• Focus on Phase 1 risk management. If you can’t hit 10% (or 8%) without breaking drawdown rules, you need to adjust your strategy before even worrying about Phase 2.
• Use the extra time in Phase 2 to your advantage. Don’t rush. Spread out your trades and let the lower target work for you.
• Don’t change your plan in Phase 2. Many traders who pass Phase 1 get overconfident and take bigger risks. Stick with what worked.
• Leverage retake policies wisely. Don’t treat unlimited retries as an excuse to gamble. Use each attempt as a learning process.

Use the PropSurvivalEngine profit/loss calculator to model your risk and profit targets for both phases before starting a challenge. Check firm comparison tools to find the best fit for your style.

Phase 1 vs Phase 2 at Futures-Only Firms

The same core logic applies to futures prop firms, although the rules and structure differ:

• My Funded Futures: One-phase only, 6% profit target, 4% max drawdown, unlimited time.
• TopStep: 6% profit target, 4% max drawdown, 2% daily, unlimited time, 5-day minimum.
• Take Profit Trader: 6% profit, 4% max, 2.2% daily, unlimited time, 5-day minimum.

Futures firms often use a single-phase model or have much lower profit targets, but tighter drawdown. The core challenge is the same: can you trade profitably within the risk parameters?

Psychology: The Hidden Factor

Even with lower targets and more time, Phase 2 can feel harder emotionally. You’ve already invested time, money, and energy. The fear of losing it all can make traders:

• Cut winners too soon to lock in gains
• Hesitate to enter trades
• Break rules out of impatience or frustration

Recognizing these traps is half the battle. Many traders pass Phase 1 with aggressive trading, then fail Phase 2 by playing too defensively—or vice versa.

Bottom Line: Where Should You Focus?

Based on real firm rules and trader experience, Phase 1 is harder for most traders—especially at firms like FTMO and FundedNext, with 10% targets in 30 days. The majority of failures happen here. But don’t let your guard down in Phase 2: the lower target and longer time can create new psychological traps.

Here’s what to do:

• Practice your strategy on a demo with the exact challenge rules (drawdown, profit, time).
• Use the extra time in Phase 2 to trade less, not more.
• Track your stats: Use PropSurvivalEngine’s challenge health grade tool to know when you’re actually at risk.
• Choose a firm with rules that match your trading style—if you need more time, avoid 30-day phase 1s; if you want lower targets, look to The5ers or E8.
• Don’t chase the highest profit split or scaling plan until you’ve proven you can pass both phases repeatedly.

Passing both phases is tough—but with a realistic view of the numbers and your own psychology, you can dramatically improve your odds.