Prop firm glossary

Every term on this site in plain English, with $100k examples.

Profit target

How much profit you must make to pass a test phase. On a $100k account a 10% target means reaching $110,000.

Daily loss limit

The most you may lose in one trading day. With a 5% limit on $100k, dropping $5,000 in a single day fails the test, even if you're up overall.

Max drawdown

The total loss floor. Break it once and the account is gone. On $100k: STATIC 10% → floor stays $90,000 forever. END-OF-DAY trailing $3k → floor $97k; close a day at $102k → floor moves to $99k (intraday swings ignored). INTRADAY trailing $3k → an open trade up $2k lifts the floor to $99k immediately; if it falls back to break-even you're $1k from failing.

Static drawdown

The floor is fixed. Example: $100k with 10% static → floor stays at $90,000 no matter how much you make. Most forgiving.

End-of-day trailing drawdown

The floor rises with your closing balance at the end of each day. Example: $100k, $3k EOD trailing → floor $97k; close a day at $102k → floor becomes $99k. Intraday swings don't move it.

Intraday (real-time) trailing drawdown

The floor follows your highest equity in real time, including open profit. Example: $100k, $3k trailing → you're up $2k on an open trade (equity $102k) → floor jumps to $99k; if the trade reverses to break-even you're only $1k from failing. Strictest type.

Consistency rule

Limits how much of your total profit can come from one day. With 40%: if you've made $5,000, your best day can be at most $2,000. Stops 'one lucky day' passes.

Minimum trading days

The fewest days you must place trades before you can pass or get paid, even if you hit the target on day one.

Profit split

Your share of profits on a funded account. 80% split on $1,000 profit = you receive $800.

Payout frequency

How often you can withdraw profits, for example on demand, weekly, every 14 days.

One-step vs two-step

One-step: one target, then funded. Two-step: pass phase 1, then a usually smaller phase 2 target. Two-step tests are often cheaper with looser loss limits.

News trading

Whether you can trade around big scheduled announcements (e.g. US jobs data, Fed decisions). Some firms ban trades a few minutes before/after.

EAs / bots

Expert Advisors: automated trading programs. Some firms allow them, some ban them or certain types (e.g. copy-trading, HFT).

Leverage

How large a position you can open relative to your account. 1:100 means $1,000 of margin controls $100,000. Higher leverage = faster gains and faster rule breaches.

Scaling

A plan where the firm increases your account size after consistent profits.

Fee refund

Some firms return your test fee with your first (or a later) payout if you pass.

Time limit

How long you have to hit the target. 'Unlimited' means no deadline (some firms still require a trade every 30 to 60 days).

Activation fee

An extra one-time fee some futures firms charge after you pass, before your funded account goes live.

Evaluation fee

What you pay to take the test. It's the firm's main revenue, since most buyers never pass.