Prop firm glossary: the terms explained
Prop firms have their own vocabulary. Here are the terms you'll meet most, in plain English.
Challenge terms
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 gain needed to pass a phase.Minimum trading days: the fewest days you must trade before passing.Risk terms
Daily loss limit: the most you may lose in a day.Maximum loss / drawdown: the most the account may fall overall.Static drawdown: a fixed floor from the starting balance.Trailing drawdown: a floor that rises with your highest balance.Consistency rule: a cap on how much one day can contribute to total profit.Payout terms
Profit split: your share of the profit.Scaling plan: a route to a bigger account or higher split.Refundable fee: a fee returned 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.Frequently asked questions
What does funded mean?
That you've passed the challenge and now trade the firm's account for a share of the profit.
What is a hard breach?
A rule break that closes the account immediately, such as hitting the maximum loss.