Know the language. Trade with confidence.
Essential prop trading terminology and definitions for informed decision-making
A
A one-time fee paid to activate your funded account after passing the evaluation phase.
The maximum amount of capital a trader can receive from a prop firm across all accounts.
The use of algorithmic trading systems or expert advisors (EAs) to execute trades automatically.
C
A requirement that no single trading day should contribute more than a certain percentage of total profits.
The practice of automatically copying trades from another trader's account, often prohibited by prop firms.
D
The maximum amount a trader can lose in a single trading day before the account is breached.
Dollar Cost Averaging policy - rules regarding averaging down on losing positions.
A mechanism that locks the maximum drawdown level as the account grows in value.
E
End of Day drawdown - maximum loss calculated at the end of each trading day.
I
Rules governing how long an account can remain inactive before facing penalties or closure.
Trading with position sizes that vary dramatically without justification, often flagged as risky behavior.
Requirement that trading accounts must be used by a single individual trader only.
L
A drawdown limit that moves up with your account balance in real-time as you make profits.
M
The largest position size allowed per trade or total exposure across all open positions.
The minimum number of days a trader must be active before requesting a payout or completing evaluation.
The smallest amount that can be withdrawn from a funded account in a single payout request.
N
Rules preventing traders from closing accounts or requesting payouts when showing negative performance.
Trading during high-impact news events, often restricted or prohibited by prop firms.
P
Restrictions on trading certain instruments or during specific market conditions.
The percentage of profits that the trader keeps, with the remainder going to the prop firm.
R
Countries from which traders cannot participate due to regulatory or compliance restrictions.
S
Rules governing how account size can be increased based on consistent profitable performance.
A fixed maximum loss limit that doesn't change regardless of account performance.
T
Specific time periods during which trading is allowed on the prop firm's platform.
