The 2 Step Challenge uses a static drawdown model. Your drawdown floor is fixed from your original starting balance and never moves, even as your account grows — and it stays fixed across both Step 1 and Step 2.
Example on a $10,000 2 Step Challenge account:
Starting balance: $10,000
Maximum drawdown floor: $9,000 (10% below $10,000)
Daily loss limit: $500 per day (5% of $10,000)
If your account grows to $10,700 through profits in Step 1, your drawdown floor remains at $9,000
Breaching either the maximum or daily loss limit is a hard breach and ends the evaluation (or, once funded, the account). Always monitor both limits throughout the trading day.