Prop Firm Glossary

A complete prop firm glossary: every funded-trading and proprietary-trading-firm term explained in plain English. Covers evaluations and challenge formats, drawdown and breach rules, consistency and trading rules, payouts and scaling, firm models and trust, and crypto prop trading. Firm-specific numbers are flagged for verification, never invented.

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Prop Firm Glossary — A to Z reference

Every prop firm term in plain English: the rules that breach accounts, the money that actually reaches you, and the red flags the affiliate sites skip.

Prop Firm Basics

Prop Firm: Firm that funds traders for a share of profits
Funded Account: Account you trade after passing an evaluation
Evaluation: Test phase that proves your skill before funding
Demo Account: Practice account on virtual funds
Sim-Funded: Funded account simulated on live prices
Live Funded: Funded account routed to a real exchange
Instant Funding: Funded account with no evaluation phase

Evaluation Structure

1-Step Evaluation: Single-phase challenge to get funded
2-Step Evaluation: Two-phase challenge, the most common format
3-Step Evaluation: Three-phase challenge for funding
Profit Target: Profit you must reach to pass a phase
Minimum Trading Days: Days you must trade before passing or withdrawing
Reset Fee: Cost to restart a breached evaluation
Activation Fee: One-time fee to start a funded account
One-Time Payment vs Subscription: Pay once for the evaluation, or pay monthly

Drawdown & Breach

Max Drawdown: Total loss allowed before the account is terminated
Daily Loss Limit: Most you can lose in a single day
Static Drawdown: Fixed loss limit that never moves
Trailing Drawdown: Loss limit that rises with gains but never falls
EOD Trailing Drawdown: Trailing limit that updates only at day's close
Intraday Trailing Drawdown: The harshest drawdown, trailing equity in real time
Buffer Zone: Profit cushion you must build before withdrawing
Breach: Breaking a rule that ends or penalises the account
Hard Breach: Violation that permanently closes the account
Soft Breach: Minor rule violation, often recoverable

Trading Rules & Restrictions

Consistency Rule: Caps how much one day can contribute to profit
Minimum Hold Time: Shortest time a trade must stay open
Max Contracts / Max Lots: Largest position size you may hold
News Trading Rule: Limits on trading around high-impact news
Overnight Holding: Whether you can hold trades past the daily close
Weekend Holding: Whether you can hold trades through the weekend
Copy Trading Rule: Whether you can mirror trades across accounts
Expert Advisor (EA) Rule: Whether automated trading bots are allowed
HFT Ban: Prohibition on ultra-fast trading
Scalping Rule: How a firm treats very short-term trading

Payouts & Scaling

Payout: Withdrawing your share of funded-account profits
Profit Split: Share of profits you keep
First Payout: Your first withdrawal from a funded account
On-Demand Payout: Withdraw any time, subject to minimums
Payout Cycle: How often you can withdraw profits
Scaling Plan: Growing your account and split over time
Max Allocation: Total capital you can manage across accounts
Fee Refund: Getting your evaluation fee back
KYC: Identity verification before payout
Withdrawal Method: How you receive your payouts

Firm Models & Trust

Simulated vs Live Capital: Whether your funded account is real or demo
Liquidity / Broker: Who supplies the prices a prop firm uses
Data Feed (Rithmic / Tradovate): The plumbing connecting you to futures markets
Exchange-Native Trading: Orders routed to a real exchange, mainly in crypto
Affiliate / Discount Code: A code that cuts the evaluation price
Restricted Countries: Countries a firm will not serve
Trustpilot / Reputation: Independent signals of whether a firm delivers
VPS: Remote server that runs your platform 24/7
Challenge Mill: A firm that profits mainly from failed evaluations

Crypto Prop

Perpetual Futures: Crypto derivative with no expiry
Funding Rate: Periodic payment between longs and shorts on perps
Maker / Taker Fees: Two-tier trading fees on crypto exchanges
Spot Trading: Buying the actual asset, not a derivative
Stablecoin: Crypto pegged to a fiat currency
On-Chain Payout: Payout settled directly on a blockchain
Altcoin: Any cryptocurrency other than Bitcoin
Crypto Wallet / Liquidation: Where payouts arrive, and forced position closure