Prop Trading Glossary

A fixed loss threshold based on your starting account balance that does not move up as you make profits. Protects your earned profit cushion.

A loss threshold that trails (moves up with) your peak account balance or equity. As you gain profit, your breach level rises accordingly.

The maximum amount your account equity or balance can decrease in a single 24-hour trading session before breaching account rules.

A rule requiring no single trading day or trade to account for more than a specified percentage (e.g., 30% or 40%) of your total profit target.

A restricted time frame (typically 2 to 5 minutes before and after high-impact economic news events like CPI or NFP) where trading is prohibited or restricted.

The percentage of earned net trading profits allocated to the funded trader versus the percentage retained by the prop firm (typically 80/20 or 90/10).

A milestone-based program where the prop firm increases your funded account balance (e.g., by 25% every 3 months) if consistency targets are met.

Demo or simulated account capital provided during evaluations or funded stages where trade orders are executed in a simulated broker feed.

A rule requiring at least one trade execution within a specific timeframe (e.g., 30 days) to prevent account forfeiture.

The paid challenge period where a trader must hit a profit target while staying within drawdown limits to qualify for a funded account.

Occurs when a trader exceeds their maximum daily loss or total loss limit, resulting in account termination.

The required percentage gain (e.g., 8% in Phase 1) a trader must reach during evaluation to advance to the next phase or become funded.

An automated trading script or bot used on MetaTrader 4/5 platforms that executes trades based on pre-programmed algorithms.

The ability (or restriction) to hold open trade positions over the weekend when markets are closed. Many prop firms restrict this.

The time from submitting a withdrawal request to receiving funds. Top firms process payouts in as little as 21 hours.

The upfront cost paid by a trader to enter a prop firm's evaluation program. Ranges from $29 to $999+ depending on account size.

The minimum number of calendar days a trader must trade during an evaluation phase. Some firms require 0 days; others require 5–10.

The maximum total capital a prop firm will allocate to a single funded trader account, typically ranging from $50K to $4M.