Glossary
25 terms across 5 categories. Click any related term to jump to its definition.
Evaluation
Profit Target
The net profit you must achieve to pass an evaluation phase, typically expressed as a percentage of account size (e.g., 6% of $50,000 = $3,000). You must reach this target while staying within drawdown limits and meeting any minimum trading day requirements.
Minimum Trading Days
The minimum number of days you must actively trade before you can pass the evaluation. A "trading day" typically means placing at least one trade that day. This prevents traders from passing on a single lucky trade and ensures consistent performance.
Activation Fee
A one-time fee charged when you pass evaluation and activate your funded account. This is separate from the evaluation fee and typically ranges from $100 to $200. Some firms waive this fee entirely or offer paths without it.
Evaluation Phase
The initial phase where traders prove their skills on a simulated account. You must meet the profit target within drawdown limits over the required minimum trading days. Most firms use a one-step evaluation, though some have two phases with different targets.
Reset Fee
A fee to restart your evaluation after breaching a drawdown limit, typically lower than the original evaluation fee. This lets you try again without purchasing a new evaluation from scratch. Not all firms offer resets.
Drawdown
EOD Trailing Drawdown
A maximum loss limit that adjusts upward at the end of each trading day based on your highest end-of-day balance. It only moves at market close, so intraday profits don't immediately tighten your cushion. Many firms use this as their primary risk control during evaluation.
Intraday Trailing Drawdown
A maximum loss limit that adjusts upward in real time as your account equity reaches new highs during the trading session. This is the strictest drawdown type because every tick of unrealized profit tightens your floor — you must protect gains as you make them.
Static Drawdown
A fixed maximum loss limit set at account opening that never changes regardless of profits. If your account starts at $50,000 with a $2,500 drawdown, your breach level is always $47,500. This is the most forgiving drawdown type because profits create a growing buffer.
Daily Loss Limit
The maximum amount you can lose in a single trading day before your account is paused or breached. This is separate from and typically smaller than the overall drawdown. Some firms enforce it as a hard breach; others pause trading for the rest of the day.
Trailing Locks at Initial
A feature where a trailing drawdown stops trailing once it reaches your starting balance. For example, if you start at $50,000 with $2,500 trailing drawdown (floor at $47,500), once your balance hits $52,500 the floor locks permanently at $50,000. After locking, you effectively have a static drawdown.
Drawdown Safety Margin
The buffer between your current balance and your drawdown breach level. When a trailing drawdown locks at initial balance, the safety margin equals your net profit. A larger safety margin gives you more room to take trades without risking a breach.
Trading Rules
Consistency Rule
A rule limiting how much of your total profit can come from a single trading day, typically expressed as a percentage (e.g., 30-50%). This prevents traders from relying on one big win. If you earn $10,000 total with a 40% rule, no single day can account for more than $4,000.
Best Day Rule
Another name for the consistency rule. Your best (most profitable) single trading day cannot exceed a certain percentage of your total profits. This ensures you demonstrate repeatable performance rather than one exceptional session.
News Trading Restriction
A rule prohibiting or limiting trading during high-impact economic news releases (e.g., FOMC, NFP, CPI). Some firms require you to close positions minutes before major announcements. Firms that allow news trading are more flexible for event-driven strategies.
Overnight Holding
The ability to hold positions past the market close into the next session. Many firms require you to be "flat" (no open positions) by a specific time. Firms allowing overnight holding are better for swing traders who hold multi-day positions.
Flat-By Requirement
A rule requiring all positions to be closed by a specific time each day, typically near the futures market close (e.g., 3:55 PM CT or 4:20 PM ET). Positions not closed by this time may be auto-liquidated by the firm.
Automation / Bots
The ability to use automated trading systems, expert advisors (EAs), or algorithmic strategies. Most prop firms prohibit this, making the few that allow it especially valuable for algo traders. Some firms allow automation but restrict VPS/VPN usage.
Copy Trading
Using a service to automatically replicate trades from another trader's account. Some firms prohibit copy trading entirely, while others allow it. Restrictions often exist to prevent multiple funded accounts from placing identical trades simultaneously.
Payout
Profit Split
The percentage of funded account profits you keep versus what the firm retains. Common splits range from 70/30 to 95/5 (trader/firm). Many firms offer tiered splits that improve as you reach profit thresholds or through scaling plans (e.g., 80% → 90% → 95%).
Payout Frequency
How often you can withdraw profits from your funded account. Common frequencies include daily, weekly, bi-weekly, and monthly. Some firms allow day-1 payouts (withdrawal available from your first profitable day), while others require a minimum period.
Minimum Payout
The minimum profit amount you must accumulate before requesting a withdrawal. This varies by firm and sometimes by tier, typically ranging from $50 to $250. Some firms have no minimum, allowing withdrawal of any profit amount.
Scaling Plan
A program that increases your account size, contract limits, or profit split as you reach performance milestones. For example, after withdrawing $5,000 in profits, your account might scale from $50K to $75K with increased contract limits. Scaling rewards consistent profitability.
Account Types
Funded Phase
The stage after passing evaluation where you trade a funded simulated account and earn real profit splits. Funded accounts have their own set of rules that often differ from evaluation — typically different drawdown types, consistency requirements, and contract limits.
Contract Limits
The maximum number of futures contracts you can hold simultaneously. Limits are usually set per account tier and may differ between standard contracts (e.g., ES) and micro contracts (e.g., MES). Larger account sizes generally allow more contracts.
Micro Contracts
Smaller versions of standard futures contracts (typically 1/10th the size). Micro E-mini S&P 500 (MES) is 1/10th of ES. Micro contracts let traders manage risk with smaller position sizes and are common in prop firm evaluations, especially for smaller account tiers.