117+ terms used by top prop firms — simplified.
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A rule that limits how much of your total profit can come from a single trading day during the evaluation or funded stage. It is designed to ensure traders show consistent performance rather than relying on one large or lucky trade to meet the profit target.
The total value of a trader’s futures account, including the cash balance plus unrealized profits or losses from open positions. It reflects the current worth of the account at any given moment.
The process of restarting an account with a fresh balance and a clean rule slate, usually at a reduced cost compared to purchasing a new evaluation. An account reset restores the original starting conditions. Resets are most commonly used for failed evaluation accounts, but some firms also allow resets for funded accounts.
Activation fees are one time charges applied by some firms after a trader passes the evaluation stage. They are required to activate a funded account and are often separate from the initial evaluation cost. These fees are common, especially in futures trading, and usually cover account setup and administrative processes. Many firms now offer options with no activation fees to attract traders
A drawdown calculation method that considers only realized profits and losses. It ignores any floating (unrealized) profits or losses from open trades. In a balance-based drawdown model, your daily loss limit is anchored strictly to your starting account balance at the beginning of each day (e.g., $100,000), creating a fixed "floor" (e.g., $95,000) that does not move regardless of how much floating profit you accumulate during your trades. This system allows you to use realized profits as an extra safety buffer, ensuring that your account is only breached if your equity drops below that pre-set starting floor, rather than being penalized by the "trailing" peaks of your open positions.
A payout schedule where funded traders can request withdrawals every two weeks (14 calendar days). This is one of the most common payout frequencies offered by prop firms, balancing between weekly and monthly cycles.
A bracket order is a setup where a primary trade is placed along with two linked exit orders, a take-profit and a stop-loss. Once the main order is executed, both exit orders are activated, and when one is filled, the other is automatically canceled.
A rule used by some prop firms that modifies the standard trailing drawdown. Normally, a trailing drawdown moves upward as your profits grow, reducing the allowable loss as equity increases. With this rule, once your profits exceed the drawdown amount, the drawdown floor stops moving higher and locks at the account’s initial balance. This effectively converts the trailing drawdown into a static drawdown at the breakeven point, preventing further upward adjustments while still protecting the original starting capital.
The portion of profits in a trading account that sits above the minimum required thresholds, such as drawdown limits or payout requirements, providing extra protection against losses. In futures prop firms, it acts as a cushion that allows traders to absorb drawdowns without breaching account rules.
The total dollar amount of positions a trader can open based on their account balance and available margin. Buying power is determined by the account size, margin requirements, and any position size limits set by the prop firm.
A simulated trading account provided by a prop firm for traders to demonstrate their skills during an evaluation. Traders pay a one-time or monthly fee, depending on the firm and challenge, to access the account. They must meet profit targets while following risk rules to qualify for a funded account.
A per-trade fee charged by the broker or prop firm for executing a trade. In futures trading, commissions are typically charged per contract per side (entry and exit), meaning a round-trip trade incurs two commission charges.
The process of closing a position in a near-expiry futures contract and opening a new position in a later-dated contract to maintain the same market exposure.
The total notional value or quantity of the underlying asset represented by one futures contract. Contract size determines how much market exposure each contract provides and varies significantly between instruments and their micro/mini/standard variants.
A rule that restricts or prohibits traders from copying trades between multiple prop firm accounts, third-party signal services, or other traders' accounts. Firms want to ensure each account reflects the individual trader's own analysis and decisions.
A professional trading platform and data provider widely used in futures trading for real-time market data, charting, and order execution. It connects traders directly to exchanges, enabling fast and reliable trade execution.
The maximum amount of money you can lose in a single trading day before trading on your account is paused or the account is failed. Once this limit is reached, all open positions are typically closed automatically. Depending on the firm, hitting the daily loss limit can result in: pause”). ● Hard breach: The account is failed immediately, preventing further trading.
A cap on the maximum profit a trader can earn in a single trading day. Once this limit is reached, any open positions will be automatically closed by the firm, and trading on the account will be restricted until the next day. This rule is relatively uncommon but exists at some firms to enforce consistency.
The real-time transmission of market prices, volumes, and other trading information from exchanges to a trader’s platform. In futures trading, data feeds provide the necessary information to make timely trading decisions.
A data feed fee is a charge for access to market data such as real time price quotes, order book depth, and trade information from exchanges. In futures trading, these fees are set by exchanges like C ME and C BOTand are passed on to traders through brokers or platforms. Data feed fees are recurring costs that may apply to live or historical data, and they vary based on asset class, data level such as Level 1 or Level 2, data speed, and user classification as professional or non professional. Depending on the exchange and data type, costs can range from free to over 100 dollars per month per exchange.The data feed fee structure differs by firm. With most firms, traders do not have to pay separately for basic data access. Some firms provide Level 1 data for free while charging for Level 2. Others may include Level 1 at no cost and offer Level 2 or market depth for one exchange for free, with additional charges for each extra exchange.
A practice trading account that uses virtual money and simulated market data, allowing traders to learn platform features and test strategies without financial risk. Demo accounts are distinct from prop firm evaluation accounts, which also use simulated funds but have real financial consequences.
A real-time display that shows pending buy and sell orders at different price levels for a futures contract, including the number of contracts available at each level.
Drawdown is the loss limit rule used by futures prop firms to control risk. These rules define how much an account can lose before it is breached. In futures trading, drawdown may be calculated based on balance or real time equity, and it can reset daily or move as profits grow depending on the firm’s structure.In prop trading firms, drawdown is mainly applied in two forms: daily drawdown and maximum drawdown. Daily drawdown limits the amount an account can lose within a single trading day, while maximum drawdown limits the total overall loss allowed on the account. These rules may be calculated using balance or equity, depending on the firm.
A drawdown calculation method where the trailing drawdown level is updated only at the end of each trading day based on the closing account balance, rather than tracking intraday equity highs in real-time.
A drawdown calculation method used by some prop firms that evaluates risk based on whichever is higher between the account balance or the account equity (balance plus any floating profit from open trades). Because of this, the drawdown level can adjust upward when open trades move into profit, even if those profits have not been realized.
The fee a trader pays to access a prop firm evaluation or challenge account. It can be either a one time payment or a monthly payment. Evaluation fees vary based on account size and evaluation type, typically ranging from about $50 for small accounts to $1,000 or more for large accounts.
A testing period during which a trader must demonstrate profitability and risk management skills by meeting specific targets while following the firm's rules. Most evaluations consist of one or two phases before a trader receives a funded account.
The process of placing and completing a buy or sell order in the market at the desired price.
Automated trading programs (also called bots or algorithms) execute trades based on pre-programmed rules without manual intervention. In futures prop trading, automated strategies typically run on platforms like NinjaTrader or through Rithmic/Tradovate-connected tools.
The date on which a futures contract becomes invalid and is settled, either through physical delivery or cash settlement, depending on the contract specifications.
FOMO is an emotional reaction where a trader feels pressured to enter a trade because they believe a strong move is happening or about to happen. This often leads to impulsive entries without a proper setup, usually at unfavorable prices.
The first profit withdrawal a trader makes after receiving a funded prop firm account. Many prop firms apply additional conditions to the first payout, such as a minimum number of trading days, a minimum profit amount, or a different profit split compared to later withdrawals.
A no-cost evaluation or demo period offered by some prop firms that allows traders to experience the platform, rules, and trading conditions before committing to a paid evaluation. Free trials typically have limited duration or features.
The futures contract with the closest expiration date currently available for trading. It is typically the most actively traded and liquid contract in a market.
A trading account provided by a prop firm after a trader successfully passes the evaluation process or purchases an instant account. Funded accounts give traders access to the firm’s capital and allow them to earn real payouts based on the profits they generate while following the firm’s risk and trading rules.
A standardized agreement to buy or sell an asset at a predetermined price on a specified future date. Futures contracts are traded on exchanges and represent assets such as commodities, indices, or financial instruments.
A strategy that places multiple buy and sell orders at predetermined price intervals above and below a set price, creating a grid of orders. As price oscillates, trades are triggered and closed for small profits at each level.
A rule governing whether a trader can hold simultaneous long and short positions in the same or correlated instruments. Some prop firms prohibit hedging entirely, while others allow it with restrictions.
A trading approach that uses algorithms to execute a very high volume of trades in extremely short timeframes, often holding positions for seconds or less. HFTstrategies profit from tiny price movements across many rapid trades.
The high-water mark is the highest equity level an account has reached. In prop trading, it is used to calculate trailing drawdown. When the account reaches a new equity high, the drawdown limit moves up to match it. If equity decreases, the high-water mark does not move down.
The starting account value when an evaluation or funded account is first activated. The initial balance is the reference point for calculating profit targets (as a percentage of initial balance) and static drawdown limits.
A prop firm program that skips the evaluation process entirely and provides a funded account immediately after purchase. Traders begin trading with simulated capital right away and can earn payouts from their first profitable trades.
An intraday trailing drawdown is a strict risk management rule used by some prop firms. It tracks the highest unrealized (open) profit reached during a trading session and uses that peak to adjust the maximum allowed loss. The limit moves upward as the account reaches new peaks but never moves down if profits decrease. Because of this, traders can fail even while still in overall profit if equity drops below the locked-in threshold.
A process where traders provide personal identification and documents to verify their identity before accessing certain features, such as funded accounts or payouts, in a prop firm.
An order to buy or sell a futures contract at a specific price or better. The trade will only execute if the market reaches the specified price.
The ease with which a futures contract can be bought or sold in the market without causing significant price changes. High liquidity means many buyers and sellers are present, allowing for faster and smoother trades.
A trading account connected to real financial markets where trades are executed with actual capital and can affect real market prices. In the prop firm context, some firms may move profitable funded traders to live accounts after certain conditions are met. For example, a trader may be transitioned to a live account after reaching a specific number of payouts or after generating a certain total payout amount.
The minimum amount of capital that must be maintained in a futures trading account to keep positions open. If account equity falls below this level due to losses, the trader may receive a margin call or have positions liquidated to restore the required balance.
The process in futures trading where open positions are revalued at the end of each trading session, and profits or losses are realized and added to or deducted from the trader’s account balance. This means gains and losses are settled daily rather than only when a trade is closed.
A market order is an instruction to buy or sell a futures contract immediately at the best available current price. It guarantees execution but does not guarantee the price, especially in fast-moving or volatile markets.
The overall attitude or feeling of market participants toward a particular futures market, reflecting whether traders are generally bullish (expecting prices to rise) or bearish (expecting prices to fall).
A trading strategy where the position size is increased after each losing trade, with the expectation that the next winning trade will recover all previous losses plus a profit. This is a prohibited strategy at most prop firms.
The maximum total decline in account equity allowed before an evaluation or funded account is terminated. Max drawdown represents the overall loss threshold for the entire account, as opposed to the daily loss limit which resets each day.
The maximum number of contracts or lots a trader is allowed to hold simultaneously on a prop firm account. This limit applies to total open positions across all instruments and prevents traders from taking excessive risk.
A smaller-sized trading account that allows traders to trade micro contracts or micro lots, typically representing 1/10th the value of a mini contract or 1/100th of a standard contract. In futures prop trading, micro accounts trade instruments like Micro E-mini (MES, MNQ) contracts.
A mini account is a futures trading account designed for trading smaller futures contracts compared to standard (full-size) futures contracts. These contracts are typically about one-fifth (1/5) the size of the standard contract, allowing traders to participate in major futures markets with lower capital requirements and more manageable risk.Mini accounts are commonly used by traders because the smaller contract size makes position sizing and risk management easier while still providing access to highly liquid markets such as the E-mini S&P500 and E-mini Nasdaq-100 futures.
The lowest amount of profit a trader must have available before they can request a withdrawal from their funded account. If your available profit is below the minimum, you must continue trading until the threshold is met.
The minimum amount of profit that must be made in a single trading day for it to count as a “profitable day” toward payout or consistency requirements in a futures prop firm.
The minimum number of trading days where a trader must close in profit, often above a defined threshold, to qualify for payouts or meet prop firm requirements.
The minimum number of days a trader must actively place trades during an evaluation phase before they can pass, even if the profit target has already been reached. A trading day is typically defined as any day where at least one trade is opened or closed.
Simultaneously holding both mini and micro futures contracts in the same account. Some prop firms restrict this, requiring traders to use only one contract type at a time.
A recurring charge some prop firms apply to active funded accounts or ongoing evaluations. Monthly fees cover platform access, data feeds, or account maintenance and are deducted from the trader's balance or charged to their payment method.
A rule that prohibits or limits trading during major economic news events such as FOM Cannouncements, Non Farm Payrolls, C PI releases, and other high-impact economic data releases. Restrictions typically apply for a window of time before and after the event. Most firms allow news trading during the evaluation phase but restrict it during the funded stage.
A trading platform widely used in futures trading for charting, order execution, and strategy development. It supports advanced analysis tools, automated trading, and integration with data providers for real-time market access.
A trading order setup where two orders are placed simultaneously, and execution of one automatically cancels the other. This is commonly used to manage risk or secure profits in trading.
One-step evaluations eliminate the second phase entirely, meaning once you hit the profit target while following the rules, you move directly to funded status — without the added time of a verification phase. However, one-step programs often come with stricter rules or higher fees to compensate.
A fee paid once to access a futures prop firm account or program, without any recurring charges. This is typically used for instant funding or evaluation accounts where traders pay upfront for access instead of paying monthly.
The total number of active futures contracts that have not been settled or closed in a market. It represents the total level of participation and outstanding obligations for a particular contract.
overnight holding refers to keeping a position open after the regular trading session ends and holding it into the next trading day. Some prop firms allow this, while others require traders to close all positions before the session closes to avoid risks such as overnight price gaps, low liquidity, or unexpected market events.
Taking an excessive number of trades beyond what your strategy calls for, either by forcing setups that don't meet your criteria or by trading too frequently due to boredom, greed, or the desire to hit profit targets faster.
The process of transitioning from a simulated trading environment to a live brokerage account where trades are executed directly on the exchange. This stage is usually achieved after a trader demonstrates consistency and hits specific profit or withdrawal milestones in a funded simulation account. It represents the final step in a prop firm's vetting process, moving the trader from "test" capital to the firm's actual risk capital.
The portion of profits that must remain in the account after a payout, preventing traders from withdrawing funds too close to drawdown or minimum balance limits. It acts as a safety cushion to keep the account active and compliant after withdrawals.
The recurring time window in which traders can request or receive payouts from a funded/Live account. This cycle is defined by the prop firm and determines how often profits can be withdrawn.
How often a funded trader can request a withdrawal of their profit share from the prop firm. Common payout frequencies include weekly, bi-weekly (every 2 weeks), and monthly cycles.
Payout max tiers control risk for the firm while rewarding consistent traders over time. Understanding this system helps traders plan withdrawals and avoid confusion about how much they can take out at each stage.
The means through which a prop firm transfers profit share payments to funded traders. Common methods include bank wire transfer, cryptocurrency (Bitcoin, USDT), PayPal, digital wallets like Payoneer, and direct ACH transfers.
The amount of time it takes for a prop firm to review, approve, and send a trader’s payout after a withdrawal request is submitted.
The process of determining how many contracts, lots, or shares to trade on a given position based on account size, risk tolerance, and the distance to the stop-loss. Proper position sizing ensures no single trade can cause catastrophic losses.
The percentage of trading profits that a funded trader receives from the prop firm. Profit share is the trader's portion of the overall profit split — in an 80/20 split, the trader's profit share is 80%.
The agreed-upon ratio that determines how trading profits are divided between the prop firm and the funded trader. Common splits include 80/20, 75/25, and 90/10, where the first number represents the trader's share.
The minimum amount of profit a trader must earn to pass an evaluation phase or qualify for a payout. Profit targets are expressed as a percentage of the starting account balance or as a fixed dollar amount.
Any trading account provided by a proprietary trading firm, encompassing evaluation accounts, funded accounts, and simulated accounts. The term broadly refers to trading under a prop firm's umbrella with their capital and rules, as opposed to trading a personal brokerage account.
The actual profit or loss that has been locked in by closing a trade. Once a position is closed, the gain or loss moves from unrealized to realized and permanently affects the account balance.
An evaluation fee that is returned to the trader after successfully passing the evaluation and meeting specific conditions, typically included with the first payout from the funded account.
A discounted fee that allows a trader to restart a failed evaluation from the beginning with a fresh account balance, rather than purchasing an entirely new evaluation. Reset fees are typically 40-60% cheaper than the original evaluation fee.
Countries or regions where traders are not allowed to register, trade, or receive payouts from a futures prop firm due to regulatory, legal, or compliance restrictions.
The emotional behavior of making impulsive, often oversized trades immediately after a loss in an attempt to quickly recover the lost money. Revenge trading is driven by frustration and anger rather than analysis and strategy.
A trader's psychological and financial capacity to withstand losses and account drawdowns without deviating from their trading plan. Risk tolerance varies by individual and directly influences appropriate position sizing, account size selection, and strategy choice.
The ratio between the potential loss (risk) and the potential gain (reward) on a single trade. Expressed as a ratio like 1:2 or 1:3, where 1:2 means you're risking $1 to potentially make $2.
A specific performance target that a funded trader must achieve to qualify for an increase in account size, profit share, or both under a firm's scaling plan. Milestones are typically based on cumulative profit, consecutive profitable months, or total payouts.
A structured program offered by prop firms that increases your funded account size, profit split, or both based on consistent profitable performance over time. Traders who meet specific milestones are rewarded with access to more capital without purchasing a new evaluation.
The official price set by the exchange at the end of a trading session, used to determine daily profits and losses for futures positions through the mark-to-market process.
A trading account that executes trades against a simulated version of the real market, using live market data but without placing actual orders on the exchange. Most prop firm evaluation and funded accounts are simulated accounts, even though traders earn real payouts from their profits.
The difference between the expected price of a trade and the actual price at which it executes. Slippage occurs when market orders are filled at a slightly different price than displayed, usually during fast-moving markets or periods of low liquidity.
The difference between the best available buy price (ask) and the best available sell price (bid) for a financial instrument at any given moment. The spread represents an implicit trading cost because you buy at the higher price and sell at the lower price.
A large-sized prop firm account, typically $150,000 and above, that trades E-mini or full-size futures contracts. These accounts are designed for experienced traders and carry higher per-point dollar exposure. The term 'standard account' is used here as a general size category — individual firms may use different labels for their largest account tiers.
A drawdown limit that remains fixed at a set level below the initial account balance, regardless of how much profit the trader earns. Unlike trailing drawdown, the drawdown floor never moves upward.
A stop order is an instruction to buy or sell once price reaches a specified “stop price,” at which point it becomes a market order. It is used primarily for risk management (stop-loss) or to enter positions, such as a sell stop placed below the current market price to limit losses on a long position, or a buy stop placed above the current market price to limit losses on a short position or enter on upward momentum. Stop orders do not guarantee execution at the stop price, especially in volatile markets.
A predetermined price level at which a losing trade is automatically closed to limit further losses. In futures prop trading, stop-losses are typically set as market orders, meaning they execute at the next available price once the stop level is hit
A trading style that aims to capture price movements over several days to weeks in the market, holding positions longer than intraday trades but shorter than long-term investments.
A predetermined price level at which a profitable trade is automatically closed to lock in gains. Take-profit orders ensure profits are captured without requiring the trader to manually monitor and close the position.
The minimum price increment at which a futures contract or other financial instrument can move. Each tick has a fixed dollar value that varies by instrument. For example, one ES tick equals 0.25 points ($12.50 per contract).
A state of emotional and mental frustration where a trader's decision-making becomes impaired, leading to irrational trades and poor risk management. Borrowed from poker, tilt typically occurs after unexpected losses, near-misses, or rule violations.
The maximum number of calendar or trading days a trader has to complete an evaluation phase. If the profit target is not reached within the time limit, the evaluation is considered failed.
A software tool that automatically mirrors trading activities, such as opening, modifying, or closing positions, from a “master” or “leader” account to one or more “follower” accounts in real time.It acts as a bridge, ensuring every action on the lead account is duplicated across linked accounts according to predefined rules, like lot size multipliers or risk filters. This allows traders to manage multiple accounts at once or let others copy their trades efficiently.
The specific times during which a futures market is open for trading. Most futures markets operate nearly 24 hours a day with short daily breaks, covering major global sessions such as Asia, London, and New York.For major US equity indices (like the S&P 500 or Nasdaq), standard trading hours on the C ME Globex platform run nearly 24 hours a day, beginning Sunday at 5:00 PM CT and closing Friday at 4:00 PM CT. A critical 60-minute daily maintenance break occurs Monday through Thursday from 4:00 PM to 5:00 PM CT, during which all trading is halted and no orders can be executed.
A detailed log of every trade taken, including entry/exit prices, position size, strategy rationale, emotional state, and outcome. Trading journals are used to review performance, identify patterns, and improve decision-making over time.
A software application used to access the trading markets, place trades, analyze charts, and manage positions. It connects traders to market data and order execution systems in real time.
A web-based charting platform used for analyzing financial markets, including futures, with advanced charting tools, indicators, and social features. It can also be connected to supported brokers for trade execution.
A cloud-based trading platform designed for futures trading, offering charting, order execution, and account management through web, desktop, and mobile access without requiring software installation.
The maximum amount your account equity can decline from its highest recorded point during an evaluation or funded account. Unlike static drawdown, the trailing drawdown level moves upward as your account reaches new equity highs, but never moves back down.
A dynamic stop-loss order that automatically adjusts in the direction of a profitable trade, maintaining a set distance from the highest price reached. Trailing stops lock in profits as the trade moves favorably while still allowing room for normal price fluctuations.
The general direction in which the price of a futures contract is moving over a period of time, either upward, downward, or sideways.
The profit or loss on open positions that have not yet been closed. Unrealized P&L fluctuates in real-time as market prices change and only becomes realized (locked in) when the position is closed.
The degree of price movement in a futures market over a period of time, indicating how fast and how much prices rise or fall.
The practice of keeping trading positions open over the weekend, from Friday market close through Sunday/ Monday market open. Many prop firms prohibit or restrict weekend holding due to the risk of price gaps when markets reopen.
A formal request submitted by a funded trader to withdraw their profit share from the prop firm. Most firms require traders to submit requests through a dashboard or portal during eligible payout windows, after which the firm reviews and processes the payment.
