Prop Firm Glossary: Every Term in Plain English

This glossary defines every term you'll see on a prop firm's rules page, each in a sentence or two. Terms are grouped by topic, and each links to the guide that explains it in full. Firms don't always use the same words for the same rule, so always check the firm's own definition too.

Basics

• Prop firm: a company that sells evaluations and pays traders who pass a share of the profit. See what is a prop firm.
• Funded account: the account you trade after passing, which can earn payouts. Often simulated.
• Simulated account: an account that uses real prices but doesn't send orders to the market. See simulated vs live funded accounts.
• Live account: an account whose orders reach the market. A few firms move top traders to one.
• Account size: the starting balance of a program, such as 25K, 50K or 150K. See choosing an account size.

Evaluation terms

• Evaluation, challenge or combine: the paid trial you trade to qualify for funding. See how evaluations work.
• Profit target: the profit you must reach to pass, usually 6% in futures. See profit targets.
• One-step / two-step: an evaluation with one phase or two. See one-step vs two-step.
• Minimum trading days: the fewest days you must trade before passing or a payout. See minimum trading days.
• Winning day or profitable day: a day that ends above a set profit, used by some payout rules.
• Instant funding or straight-to-funded: a program that skips the evaluation. See instant funding.
• Reset: restarting an evaluation after a rule break, usually for a fee. See reset fees.

Drawdown and risk terms

• Drawdown, max loss or trailing threshold: how far your balance can fall before the account ends. See drawdown rules.
• End-of-day drawdown: a limit that rises only with your closing balance. See end-of-day drawdown.
• Intraday trailing drawdown: a limit that rises with your highest balance, including open profit. See intraday trailing drawdown.
• Static drawdown: a limit that never moves.
• Lock or trail stop: the level at which a trailing drawdown stops rising.
• Daily loss limit (DLL): the most you can lose in one day. A soft limit pauses trading; a hard limit ends the account. See the daily loss limit.
• Consistency rule: a cap on how much of your profit can come from your best day. See the consistency rule.
• Contract limit: the largest position you can hold. See contract limits.
• Scaling plan: a rule that raises your contract limit as you profit.
• News rule: a rule on trading around scheduled economic releases. See news trading rules.

Payout terms

• Profit split: your share of each payout, often 80% or 90%. See profit splits.
• Buffer: profit you must hold above your starting balance before withdrawing. See payout buffers.
• Payout cycle or frequency: how often you can request a payout. See payout frequency.
• Minimum and maximum payout: the smallest and largest amount you can request at once.
• Contractor agreement: the contract most firms sign with funded traders before the first payout. See payout methods.

Fee terms

• Evaluation fee: the price of an evaluation, paid once or monthly. See one-time vs monthly.
• Activation fee: a one-time charge when you pass. See activation fees.
• Data fee: a charge for live futures market data. See data fees.
• All-in cost: everything you pay across every attempt until a payout. See the All-in Cost tool.

Market terms

• Mini and micro contracts: futures contract sizes; a micro is one-tenth of a mini. See micro vs mini contracts.
• Futures, forex, crypto and stock prop firms: firms grouped by the market they fund. See types of prop firms.

Common questions

What's the most important term to understand?

Drawdown. It ends the most accounts, and its type changes how you should trade.

Do firms use the same words for the same rules?

Not always. One firm's "max loss" is another's "trailing threshold". Every firm page links to the firm's own definitions.