Sign in Sign up free

Site available in 10 languages

Prop firms Discounts Rankings Traders Learn Rewards

Sign in Sign up free

Prop trading glossary

54 terms, each with the plain meaning, how firms actually apply it, and which firms it affects. Written for someone about to spend money, not for a dictionary.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A 4 terms

Activation fee Costs A one-off charge some firms take before a passed account goes live. Rarely advertised next to the challenge price. Add-on Costs A paid upgrade at checkout — a bigger split, faster payouts or a relaxed rule. Usually cheaper than a reset. Allocation Payouts The capital a firm assigns you after passing. Often simulated rather than live, which is legal and worth knowing. Average payout time Payouts Time from request to money received. We publish it only once a firm has five verified proofs.

B 3 terms

Balance-based drawdown Risk rules A limit measured on closed balance only, ignoring floating loss. Materially more forgiving than equity-based. Breach Risk rules Any rule violation that closes the account. Most often the daily loss limit, including floating loss. Buffer Risk rules The distance between your current equity and the level that would breach. The only number that matters intraday.

C 4 terms

Commission Costs A per-lot or per-contract cost charged on the funded account, deducted before your split is calculated. Consistency rule Risk rules A cap on how much of your total profit may come from a single day or trade. Often applied only at payout review. Copy trading Evaluation Mirroring trades across accounts. Prohibited by most firms even between two of your own accounts. Cushion Risk rules Profit banked above the starting balance that widens your drawdown room. Erased by trailing limits.

D 4 terms

Daily loss limit Risk rules The maximum you may lose in one session, usually reset at the firm’s midnight rather than yours. Data fee Costs A monthly exchange data charge on futures accounts, varying widely with the exchanges you enable. Drawdown Risk rules The decline from a reference point to your current equity. Which reference point is the entire question. Dry run Evaluation A free trial account with real rules and no payout. The cheapest way to test whether a rulebook suits you.

E 4 terms

End-of-day balance Risk rules The closed balance at session end, used by firms whose trailing limit only moves overnight. Equity high-water mark Risk rules The highest equity your account has reached. Trailing limits are measured from it. Evaluation Evaluation The paid test that decides whether you receive a funded account. One, two or three phases. Expert advisor Platforms An automated strategy running on the platform. Permitted by many firms, restricted by some, banned by a few.

F 2 terms

Floating loss Risk rules Unrealised loss on open positions. Counts toward the daily limit at most firms. Funded account Evaluation The account you trade after passing an evaluation, on the firm’s capital and its rules.

H 1 term

Hedging Evaluation Holding opposing positions in the same or correlated instruments. Often restricted across accounts.

I 2 terms

Inactivity rule Evaluation A requirement to place at least one trade within a set period or lose the account. Instant funding Evaluation A funded account bought outright with no evaluation, usually with tighter limits and a lower split.

K 1 term

KYC Payouts Identity verification before the first payout. Budget a few days for it and start it early.

L 3 terms

Latency arbitrage Evaluation Exploiting delayed pricing feeds. Prohibited everywhere and a standard reason for voiding profit. Leverage Platforms The multiple of account size you may control. Higher leverage does not widen your loss limit. Lot size Platforms The unit of position size in forex. The main lever you use to keep risk inside a drawdown limit.

M 1 term

Minimum trading days Evaluation The fewest days on which you must place a trade to pass. Stops a single lucky session counting.

N 1 term

News trading Evaluation Entering around high-impact releases. Commonly restricted inside a window on funded accounts.

O 2 terms

One-step evaluation Evaluation A single-phase test with one profit target, usually higher than a two-step first phase. Overnight holding Evaluation Keeping positions open past session close. Restricted on some futures accounts, free on most forex ones.

P 6 terms

Payout Payouts The transfer of your share of funded-account profit, requested on the firm’s cycle and paid after its review. Payout methods Payouts How the money actually reaches you — bank transfer, an e-wallet or crypto — and who pays the fee. Platform fee Costs A recurring charge for the trading platform itself, separate from the evaluation price. Profit split Payouts The share of funded-account profit you keep. Commonly 80% to 90%, occasionally 100%. Profit target Evaluation The gain required to pass a phase, normally 8–10% of the starting balance. Prohibited strategies Evaluation The list of approaches that void profit or close the account. Read it before you pay, not after.

R 3 terms

Refundable fee Costs A challenge fee returned with your first payout, conditional on rules most traders skim. Reset Costs Paying to restart a failed evaluation on the same account. Compare it against simply buying a new one. Risk per trade Risk rules What one losing trade costs you. Size it against the distance to your breach level, not the account size.

S 6 terms

Scaling plan Payouts The schedule by which a firm raises your account size and profit share after sustained results. Simulated account Platforms An account trading live prices without live capital. Standard in this industry and not itself a warning sign. Slippage Platforms The gap between expected and filled price. Matters most near a loss limit, where it can breach for you. Spread Costs The gap between bid and ask. A widened spread on a funded account is a real, recurring cost. Static drawdown Risk rules A maximum loss level fixed at your starting balance. It never moves, so profit you make is genuinely yours to risk. Stop-loss requirement Risk rules A rule obliging every position to carry a stop. Enforced automatically by some platforms.

T 4 terms

Time limit Evaluation A deadline for reaching the profit target. Increasingly removed, and its removal is a real improvement. Trailing drawdown Risk rules A loss limit that follows your highest equity instead of staying at your starting balance, so profit permanently tightens your room to lose. True cost Costs What a funded account actually costs: the fee times the attempts you need, plus activation, data and platform charges. Two-step evaluation Evaluation A challenge plus a verification phase, with a lower target on the second.

V 1 term

Verification phase Evaluation The second phase of a two-step evaluation, confirming the first was not luck.

W 2 terms

Weekend holding Evaluation Carrying positions across the weekend. Permitted by most forex firms, restricted by most futures ones. Withdrawal threshold Payouts The minimum profit you must accumulate before a payout may be requested.