Pick a firm and pass the eval · Stage 2 · Free
Most traders who fail Phase 2 of a two-step funded futures evaluation do so after passing Phase 1 cleanly — with the same process, the same account, and the same rules. The difference is behavior: they size up because the profit target is lower, or they run their sessions looser because Phase 1 feels "done." This article shows why the sizing formula never changes between phases, and what the pre-session routine looks like on Phase 2 day one.
Part 1 of 4 — The formula in Phase 1 and Phase 2
Understanding why the formula is identical removes the biggest source of Phase 2 sizing errors: the belief that Phase 2 is structurally different from Phase 1 in a way that justifies different position sizes.
The position sizing formula for funded futures accounts produces a per-trade risk ceiling from two independent constraints. The first is the current trailing drawdown floor distance — how far your account balance sits above the floor that ends the evaluation. Divide that distance by 10 to give yourself 10 consecutive-loser buffer before hitting the floor. The second is the daily loss limit — the per-session maximum loss that ends the session regardless of where the trailing drawdown floor sits. Divide the DLL by 4 to give yourself 4 consecutive-loser headroom in a single session.
Use the smaller of the two numbers as your per-trade risk ceiling for that session. Translating the dollar ceiling into contract count requires your planned stop width in points and the instrument's point value. This calculation does not change between Phase 1 and Phase 2 — the formula is the same, the two inputs are the same parameters, and the binding constraint logic is the same.
In most two-step evaluations, Phase 2 begins with the same account balance and the same drawdown parameters as Phase 1. The trailing drawdown distance at Phase 2 day one is identical to Phase 1 day one — the floor has reset to the starting position, and the balance has reset to the starting value. The DLL is typically the same dollar amount in both phases. Under these conditions, the sizing ceiling at Phase 2 day one is numerically identical to Phase 1 day one.
The one parameter that does change is the profit target: Phase 2 typically requires 4-5% of account value compared to Phase 1's 8-10%. A lower profit target is sometimes interpreted as a more forgiving phase. It is not — the constraints that end the evaluation (trailing drawdown floor and DLL) are unchanged. The profit target being lower means the evaluation ends sooner after a successful run, not that losses are more tolerable during the run.
Some firms apply slightly different DLL values to Phase 2, or offer relaxed minimum trading day counts. These are firm-specific variations — verify your firm's current terms before assuming Phase 2 parameters match Phase 1 exactly. When parameters differ, recalculate from the Phase 2 parameters as if beginning a new evaluation. The formula does not change; the inputs may.
A single DLL violation in Phase 2 ends the phase with the same finality as in Phase 1. A trailing drawdown breach in Phase 2 ends the evaluation entirely — or at minimum triggers a Phase 2 restart. The consequences of a sizing error are structurally identical in both phases. There is no rule in a standard two-step evaluation that treats an oversized losing trade differently in Phase 2 than in Phase 1.
If the formula could be relaxed in Phase 2 — if slightly larger position sizes were acceptable because the profit target is lower — that would mean the termination rules were also relaxed in Phase 2. They are not. The trailing drawdown floor distance that ends the evaluation is the same number. The DLL that ends the session is the same number. A formula that fits those constraints in Phase 1 fits them identically in Phase 2, and a formula that exceeds them in Phase 2 ends the phase at the same threshold it would have ended Phase 1.
Part 2 of 4 — Three sizing drift patterns in Phase 2
Naming the drift patterns in advance is the only way to prevent them. By the time one appears in live trading, the damage is usually already done.
The most common Phase 2 sizing error is interpreting the lower profit target as a sign that the phase requires less precision. The logic is: Phase 1 required 8-10% profit under strict sizing, so a Phase 2 with only 4-5% required must be achievable with less discipline. This reasoning inverts the relationship between profit target and sizing constraint. The profit target describes how much profit is needed to pass — it says nothing about how much loss is tolerable per trade or per session.
A trader who passes Phase 1 with a $250 per-trade ceiling and sizes up to $400 per trade in Phase 2 to "get to the target faster" now reaches the DLL in 2-3 trades instead of 4. The faster path to the profit target is also a faster path to the termination boundary. The pre-session formula prevents this by re-deriving the ceiling from the actual constraints — trailing drawdown distance and DLL — not from the profit target pace.
Traders who maintained a disciplined pre-session routine in Phase 1 — calculating DTF ÷ 10 and DLL ÷ 4, checking the news calendar, setting the session's daily profit stop — sometimes drop parts of that routine at the start of Phase 2. The reasoning is that the process "already proved itself" in Phase 1, so the routine feels optional for a phase that should be easier.
Dropping the pre-session calculation does not change the constraints — it changes whether the trader knows what the constraints are before the session opens. A session that starts without a known per-trade ceiling typically ends with a larger effective size than the formula would allow, not because the trader intended to oversize, but because the number was never checked. The ceiling is re-derived each morning because the floor distance changes with each session's outcome. Skipping the calculation in Phase 2 is equivalent to skipping it in Phase 1 — it removes the only tool that translates the evaluation's rules into a per-trade action.
The consistency rule caps the largest single session's profit as a percentage of total period profit. In Phase 2, the period starts fresh on day one — the denominator (cumulative period profit) is zero at the start and builds slowly. A strong session early in Phase 2 can consume a large fraction of the total profit built so far, because few sessions have contributed to the denominator yet.
A trader who holds the same absolute position size in Phase 2 as in Phase 1 but trades a strong early-Phase-2 session may produce a best-day percentage that passes the consistency rule in Phase 1 (where 10+ sessions have diluted the denominator) but violates it in Phase 2 (where 2-3 sessions have built the denominator). This is not a Phase 2 rule change — the formula is the same. It is a calendar effect: the denominator is smaller in the early Phase 2 sessions, so the same absolute session profit produces a higher percentage. Running the best-day formula from Phase 2 session one prevents this from becoming a surprise on session three or four.
Part 3 of 4 — Worked $50K two-step example
Representative parameters — verify your firm's current rules before trading.
Typical $50,000 two-step Phase 1 parameters: starting balance $50,000, trailing drawdown $2,500 (floor starts at $47,500), DLL $1,000, profit target $4,000 (8% of account), minimum trading days 10. On day one of Phase 1, the trailing drawdown floor distance is $2,500 (the full drawdown amount, before any losses reduce it). DTF ÷ 10 = $250. DLL ÷ 4 = $250. Both constraints produce the same ceiling. Per-trade maximum risk: $250.
Translating $250 to contracts on /ES (S&P 500 futures): at a 5-point stop and $50/point value, $250 allows 1 contract. On /MES (micro S&P 500) at $5/point, $250 allows 1 contract with a 50-point stop. The contract count depends on your planned stop width — the $250 ceiling is the starting number, and you size contracts down from there based on the distance to your planned stop.
After a profitable Phase 1 session, the trailing drawdown floor has advanced with your equity — the floor is now higher, meaning floor distance may be the same or smaller depending on how far equity moved above the starting value before the floor locks. After a losing session, floor distance shrinks. Recalculate DTF ÷ 10 each morning using current floor distance, not the day-one number. The DLL resets each morning.
Typical $50,000 two-step Phase 2 parameters: starting balance $50,000 (resets to starting value, same as Phase 1), trailing drawdown $2,500 (floor resets to $47,500, same as Phase 1 day one), DLL $1,000, profit target $2,000 (4% of account), minimum trading days 5-10. On day one of Phase 2, DTF ÷ 10 = $250. DLL ÷ 4 = $250. Per-trade maximum risk: $250. Identical to Phase 1 day one.
The profit target is half of Phase 1's target. Under the same $250 ceiling with the same trading process, Phase 2 should be completed in roughly half the sessions it took to complete Phase 1 — not in fewer sessions through larger position sizes. The lower target is a structural time advantage; it is not a signal to increase risk per trade.
Continue the same morning calculation through all Phase 2 sessions: current DTF ÷ 10, current DLL ÷ 4, take the smaller, convert to contracts. The calculation is the same process that ran every morning of Phase 1. Stopping it in Phase 2 because it "already worked" removes the safeguard that made it work in Phase 1.
Not different: trailing drawdown parameters, DLL value, consistency rule formula, the sizing formula itself, the session termination rules, the contract count at a given stop width, the consequence of a DLL violation, the consequence of a trailing drawdown breach.
Different: the profit target is lower, so the evaluation ends sooner once the target is reached. The minimum trading day count is sometimes lower. The consistency rule denominator starts at zero on Phase 2 day one, so early sessions have a tighter effective best-day ceiling than sessions later in the Phase 2 window.
The practical checklist for Phase 2 day one: confirm that your firm's Phase 2 parameters match Phase 1 (trailing drawdown amount and DLL — most firms keep these identical); run DTF ÷ 10 and DLL ÷ 4 on Phase 2 starting values; use the same per-trade ceiling you would have used on Phase 1 day one; check the news calendar; set the daily profit stop using the same formula (total net profit × 0.28, which starts at $0 × 0.28 = $0 on Phase 2 day one — meaning the daily profit stop has no binding effect until you build a profit base); and run the consistency rule best-day check after each session once any profit has been recorded.
Part 4 of 4 — Pre-session routine for the Phase 2 transition
Do not simplify the pre-session routine for Phase 2 because the phase "should be easier." The routine is what made Phase 1 passable. Phase 2 is the same distance from a funded account as Phase 1 was at the start.
Before trading Phase 2 session one, confirm three things from your firm's Phase 2 terms: (1) the trailing drawdown amount in Phase 2 — most firms match Phase 1, but some reduce or increase it; (2) the DLL in Phase 2 — most firms match Phase 1; (3) the consistency rule in Phase 2 — most firms apply the same formula. If all three match Phase 1, your day-one ceiling is numerically identical to Phase 1 day one. If any differ, recalculate from the Phase 2 parameters.
Then confirm the Phase 2 minimum trading day count and profit target. Set your session count accordingly — do not try to complete Phase 2 in fewer sessions than the minimum day requirement by using larger size. The minimum day requirement is a hard gate regardless of when the profit target is reached.
Each morning of Phase 2, run the same four-step sequence that ran each morning of Phase 1:
Step 1 — Trailing drawdown floor distance. Current balance minus current floor position = floor distance. DTF ÷ 10 = maximum per-trade risk from the drawdown constraint. On Phase 2 day one this is the starting drawdown amount divided by 10.
Step 2 — Daily loss limit. DLL ÷ 4 = maximum per-trade risk from the DLL constraint. On Phase 2 day one this is the same DLL amount divided by 4 as on Phase 1 day one. The DLL resets each morning.
Step 3 — Take the smaller ceiling. Whichever of DTF ÷ 10 or DLL ÷ 4 is smaller is the binding constraint for the session. Use that number as your per-trade risk ceiling.
Step 4 — Consistency rule check. If any profit has been recorded in Phase 2, calculate the best-day percentage: largest single session profit ÷ total Phase 2 net profit to date. If this number is already at or above your firm's best-day cap, size down or stay flat today to prevent a consistency violation on a profitable session. In the early Phase 2 sessions (days 1-4), a single good session can dominate the denominator — run this check every morning once any profit exists.
The same session stop conditions that applied in Phase 1 apply identically in Phase 2: stop when DLL headroom drops below one trade's worth of ceiling risk (e.g., if your ceiling is $250 and you have taken two losing trades totaling $400, your remaining DLL headroom is $600, which allows two more $250-risk trades — that's your signal that the session is entering its final trades); stop when a news event creates gap risk you did not plan for; stop when the daily profit stop is reached (total Phase 2 net profit × 0.28 = today's ceiling — once that number is hit, taking more profit risks a consistency rule violation).
The funded contract becomes available when Phase 2's profit target is hit with all rules intact and the minimum day count is reached — not sooner. Forcing the timeline by holding sessions past the stop conditions accelerates the timeline toward a DLL violation or consistency breach, not toward the funded contract. Let the process run at the same pace it ran in Phase 1. If Phase 2 takes the same number of sessions as Phase 1, that is the correct result of applying the same process — not a failure of pace.
No — the formula is identical. Trailing drawdown floor distance divided by 10 gives your maximum per-trade risk from the drawdown constraint. Daily loss limit divided by 4 gives your maximum per-trade risk from the DLL constraint. Use the smaller of the two numbers, just as you do in Phase 1. Most two-step evaluations use the same drawdown parameters in both phases, so the actual ceiling number is also the same on day one of each phase. The only scenario where Phase 2 would produce a different opening-day ceiling is if the firm applies different drawdown or DLL values to Phase 2 — verify on your firm's current terms before assuming the parameters match.
Yes — recalculate on day one of Phase 2 exactly as you would on day one of Phase 1. Check your firm's Phase 2 starting parameters: the trailing drawdown distance and DLL that apply at the start of Phase 2. Run DTF ÷ 10 and DLL ÷ 4 and take the smaller number as your day-one ceiling. Then apply the same pre-session calculation each morning of Phase 2, using the current floor distance and DLL remaining. The transition from Phase 1 to Phase 2 does not exempt you from running the sizing calculation — it is a new evaluation period with the same rules running from day one.
Three reasons. First, the lower Phase 2 profit target creates the impression that Phase 2 is more forgiving — and traders interpret "more forgiving" as permission to use more size. The target being lower does not change the drawdown or DLL constraints. Second, passing Phase 1 creates a reward signal that relaxes execution discipline — traders who ran strict pre-session routines sometimes drop the routine after the Phase 1 pass, which produces informal sizing that trends upward. Third, traders who are close to the funded contract feel time pressure and size up to reach the Phase 2 target faster. That urgency causes more Phase 2 DLL violations than any other single pattern.
The consistency rule formula is the same in Phase 2, but the window starts fresh on day one — the denominator (cumulative period profit) is zero and builds slowly across the Phase 2 sessions. A strong session early in Phase 2 can represent a larger fraction of total period profit than the same session would in Phase 1, where more sessions have contributed to the denominator. The practical implication: avoid outsized sessions in the first few days of Phase 2. Run the best-day percentage formula daily from session one of Phase 2, not just when you think you are close to a violation.
Before buying a Phase 2 restart, identify the session and trade where the violation occurred and trace it to one root cause: you sized above the DTF ÷ 10 or DLL ÷ 4 ceiling (pre-session calculation skipped or ignored); you ran out of DLL headroom because earlier trades had already consumed headroom, making the effective ceiling tighter than the pre-session number; or a news event caused a loss that exceeded planned risk on an otherwise correctly-sized trade. Root causes one and two are fixed by running the pre-session calculation, tracking intraday DLL headroom remaining after each trade, and stopping the session when remaining headroom drops below one trade's worth of ceiling risk. A Phase 2 restart without identifying the root cause will produce the same violation at the same point in the next attempt.
Phase 2 is not a formality. Apply the same pre-session routine that passed Phase 1.
Most Phase 2 failures are not evaluation design failures — they are process failures that Phase 1 masked through good timing or lower variance. The method is the pre-session routine that prevents those failures by keeping DTF ÷ 10, DLL ÷ 4, and the consistency window in view before every session, not just in Phase 1. First 100 founding seats at $19/mo — locked for life.