Three-Step Challenge
An evaluation with three sequential phases, adding a verification step on top of the standard two-step model — rarer and typically cheaper.
Definition
A three-step challenge adds a third verification phase to the standard two-step model. The first two phases follow the usual structure (8% then 4-5%), and the third phase typically has a lower target (3-4%) with extended time. The extra phase gives the firm more data before committing to a funded account and is usually priced lower than two-step challenges because the higher failure rate across three phases works in the firm's favor. Three-step models are less common than two-step and are largely an offering from newer or mid-tier firms.
Example
Why It Matters
Three-step challenges look attractive on fee alone but extend the time-to-funded substantially. A trader who would have been funded in 20 trading days on a two-step model might take 60+ days on a three-step — and the longer the evaluation, the higher the cumulative probability of a single bad day breaching drawdown. Firms like The 5ers, The Funded Trader, and Goat Funded Trader offer three-step options alongside their two-step products.