Prop firm glossary: terms made easy
Prop trading comes with its own lingo. Here are the words you'll bump into most, explained in everyday language.
Challenge words
Challenge / evaluation: the test you pay for to get funded.Phase / step: one stage of the challenge, each with its own target.Profit target: the percentage you need to gain to pass a phase.Minimum trading days: the fewest days you have to trade before passing.Risk words
Daily loss limit: the most you can lose in a day.Maximum loss / drawdown: the most your account can drop overall.Static drawdown: a limit fixed to your starting balance.Trailing drawdown: a limit that rises with your highest balance.Consistency rule: a cap on how much one day can add to your total profit.Payout words
Profit split: your share of the profit.Scaling plan: a path to a bigger account or a higher split.Refundable fee: a fee you get back with a payout.KYC: identity checks before funding or payout.Pay after pass: a small fee to start and the rest only if you pass.Questions traders ask us
What does funded mean?
It means you've passed the challenge and now trade the firm's account for a share of the profit.
What's a hard breach?
A rule break that closes your account right away, like hitting the maximum loss.