Prop Firm Glossary

A one-time fee charged by most prop firms to activate the funded account stage after passing the evaluation, typically $85-$200.

The maximum number of funded accounts a single trader can hold simultaneously with one prop firm — ranging from 3 at conservative firms to 20 at Apex.

Trading executed by computer algorithms rather than manual orders — explicitly allowed at some prop firms (Lucid, Tradeify) and restricted at others.

A rule limiting how much of your total profit can come from a single trading day, designed to prevent payout cycles built on one lucky session.

A trading approach where one source account's trades are automatically replicated across multiple destination accounts — heavily restricted at most prop firms.

A cap on how much an account can lose in a single trading session — independent of cumulative drawdown — designed to prevent one bad day from ending the account.

A threshold at which a trailing drawdown stops moving up — the floor "locks" at starting balance plus a small buffer, so further profits don't tighten the drawdown floor.

A trailing drawdown that updates only at the end of the trading day based on closing balance, ignoring intraday peaks — significantly more forgiving than intraday trailing.

A trading account capitalized by a prop firm — usually after evaluation — where the trader executes real strategies and receives payouts under firm-defined rules.

Algorithmic strategies that place hundreds or thousands of trades per session, often with sub-second hold times — heavily restricted at most prop firms.

A trailing drawdown that updates in real time on every tick of unrealized profit, including intraday peaks — the most punishing drawdown variant.

The total dollar amount your account can lose from its highest point (or starting balance) before the account is automatically closed.

A strategy that doubles position size after each loss to recover prior losses with a single win — universally banned or heavily restricted at prop firms due to catastrophic risk.

Smaller-sized versions of major futures contracts (typically 1/10th the size of mini futures), designed for retail and prop firm traders to manage risk with less capital.

Mid-sized futures contracts (typically 10x the size of micro futures, 1/5th to 1/10th the size of pit-traded contracts) — the most-traded futures contracts on US exchanges.

A trading approach that takes positions around major economic news events — restricted, banned, or fully allowed depending on the prop firm.

The percentage of profits a funded trader keeps versus the percentage retained by the prop firm, typically ranging from 80% to 100%.

The profit amount or percentage required to pass an evaluation phase, typically 6-10% of the account size depending on firm and product.

A structured evaluation program — usually with profit targets, drawdown limits, and trading rules — that traders must complete to qualify for a funded account.

A fee paid to restart a failed evaluation account from scratch, typically $50-$100 per reset, allowing traders to retry without buying a new evaluation.

Any violation of a prop firm's trading rules — some breaches are warnings, others permanently end the account.

A drawdown limit fixed at a single dollar amount below starting balance that does not move up as the account grows — the simplest and most predictable drawdown model.

A drawdown limit that follows your account's high water mark, tightening as you profit and capping your maximum loss from peak balance — the dominant risk model in the futures prop firm industry.

The smallest price movement allowed on a futures contract — a fixed increment defined by the exchange that determines how prices step up and down.

The dollar value per minimum price movement on a futures contract — multiplying tick value by ticks moved gives your dollar P&L change per contract.

The minimum number of separate days a trader must be active on an account — typically 5 — before passing evaluation or qualifying for the next payout.