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Prop Trading Glossary

62 terms every funded trader ends up learning, usually the expensive way. Plain English, with the trap behind each rule spelled out.

Activation Fee

A one-time fee some firms charge to open your funded account after you pass the evaluation. It is separate from the evaluation price. Example: a firm sells a $99 challenge and then charges $149 to activate the funded account. Some firms charge nothing, which is why we flag 'No activation fee' on this list.

Affiliate Coupon

A discount code negotiated between a firm and a partner site like ours. It is tested at the real checkout before we publish it. A public code from the firm's own banner can be weaker than the partner code, or the other way around, so we compare both and publish whichever saves you more.

Evaluation (Challenge)

The test phase where you trade simulated capital under rules (profit target, drawdown limits). Pass it and the firm gives you a funded account. Think of it as a driving test: the examiner cares more about you not crashing than about how fast you arrive.

Breach (Violation)

Breaking any account rule, usually a drawdown limit. Most breaches end the account instantly, even if the position later recovers. It is the prop trading equivalent of a disqualification, not a penalty point.

Buffer

The distance between your current balance and your drawdown limit. Traders 'build a buffer' with small early wins so one bad day cannot end the account.

Consistency Rule

A cap on how much of your total profit can come from a single day, e.g. 30%. If the rule is 30% and you made $1,000 total, no single day may exceed $300, so one lucky day cannot carry the whole target. Firms apply it mostly to payouts. Check each firm's percentage in our reviews.

Contract (Futures)

The standard trading unit of a futures market. One ES contract represents the S&P 500 index at $50 per point. Prop plans limit how many contracts you may hold at once.

Daily Loss Limit

The most you may lose in one day before the account is breached. A $2,500 daily limit means being down $2,500 at any moment that day ends the account, even if price would have recovered an hour later.

Data Feed

The live price stream (e.g. from CME) your platform needs. Some firms include it; others charge a monthly market data fee on funded accounts, typically around $100 to $135 for full CME futures data.

Day-1 Payout

The ability to request your first withdrawal immediately after your first profitable day on a funded account, instead of waiting for a minimum number of days. Rare and valuable, see which firms offer it.

Drawdown

How far your account is allowed to fall from its peak before it is closed. The single most important rule in prop trading, and the one that ends most accounts. Full guide: Drawdown Management.

EOD Drawdown (End of Day)

A drawdown limit recalculated only at the session close. Inside the day your equity can dip below the line without breaching, as long as it closes above it. More forgiving than intraday trailing, and usually more expensive.

Trailing Drawdown (Intraday)

A drawdown line that follows your equity peak in real time, including open positions. If your open profit hits +$3,000 and the trail is $2,500, the line moves up and locks: giving the profit back can now breach you even though you never lost 'real' money. The trap that catches most beginners.

Static Drawdown

A drawdown line fixed at a set amount below your starting balance. It never moves up, so it is the easiest type to manage and the rarest offered.

Funded Account

The account the firm gives you after you pass. Depending on the firm it may be live capital or a simulated account whose profits the firm pays from its own revenue (sim-funded). Either way, real withdrawals.

Futures

Standardized contracts to buy or sell an asset at a future date, traded on exchanges like the CME. Most US-style prop firms fund futures traders on indexes (ES, NQ), energy (CL), metals (GC) and crypto contracts (BTC/MBT).

Gamma Exposure (GEX)

A measure of how much option market makers must hedge as price moves, which creates zones where the market tends to slow down or accelerate. We publish a free daily GEX dashboard on the Gamma page.

Instant Funding

Skipping the evaluation entirely: you pay more upfront and start on a funded account immediately. Costs several times an evaluation, so it only makes sense if your strategy is already consistent.

KYC (Know Your Customer)

Identity verification (document + selfie) required before your first payout. Doing it early avoids delaying your first withdrawal.

Leverage

Trading a position larger than your cash. In futures it is built into the contract's margin. More leverage means the same price move hits your drawdown harder, in both directions.

Margin

The deposit the exchange requires to hold one contract. Intraday margins at prop firms are set per plan and limit how many contracts you can hold.

Micro Contract

A futures contract 1/10 the size of the standard e-mini (MES vs ES, MNQ vs NQ). Micros let you scale risk finely, e.g. 3 micros instead of jumping from 0 to 1 mini.

Minimum Trading Days

How many days you must trade before passing or withdrawing, regardless of profit. A firm with a 1-day minimum can fund you this week; a 10-day minimum cannot.

News Trading Rule

Restrictions on holding or opening positions around scheduled economic releases (CPI, FOMC, NFP). Some firms forbid it only on funded accounts, some not at all. Breaking it can void profits, so check the review before trading events.

One-Step / Two-Step

The number of evaluation phases. One-step: pass a single phase and get funded, usually with tighter rules. Two-step: two phases with lower targets each. Two-step is slower but often cheaper for the same size.

Payout

Withdrawing your share of profits. Firms differ on cycle (on demand, weekly, biweekly), minimums, and caps in the early months. Guide: How to Withdraw Your Winnings.

Payout Cap

A ceiling on how much you can withdraw per cycle in your first months, e.g. $2,000 per cycle for the first three payouts. After a few cycles most firms remove it.

Profit Split

How profits divide between you and the firm. '90/10' means you keep 90%. Many firms give you 100% of the first few thousand dollars, then the split kicks in.

Profit Target

The profit you must reach to pass a phase, e.g. $3,000 on a $50K account (6%). Lower targets with the same drawdown are mathematically easier, which is how we rank difficulty in comparisons.

Prop Firm (Proprietary Trading Firm)

A company that gives traders access to a funded account in exchange for passing a test and sharing profits. You risk a small fee instead of your own capital; the firm filters for discipline. Full beginner guide: What is a prop firm?

Refundable Fee

An evaluation fee returned after you reach a milestone on the funded account (often with the first payout). Turns the test cost into a deposit rather than an expense, if you pass.

Reset

Paying to restart a failed evaluation from scratch, usually cheaper than buying a new one. Firms sell resets because most traders fail on rule breaches, not strategy.

Scaling Plan

A schedule that increases your size or contracts as you hit milestones. Example: start with 5 contracts, unlock 10 after $2,500 in profit. Protects the firm from a hot streak by an undisciplined trader.

Sim-Funded Account

A funded account that runs on simulation while the firm pays your profits from its own revenue. Standard in futures prop. Your withdrawals are real money either way; what changes is where the firm's risk sits.

Slippage

The difference between the price you clicked and the price you got filled. Grows in fast markets and thin books, and eats intraday drawdown headroom.

Tick

The smallest price increment of a contract, with a fixed dollar value: one ES tick = $12.50, one NQ tick = $5. Knowing your tick value is the base of position sizing: Position Sizing guide.

Tradovate / Rithmic / NinjaTrader

The most common platforms and data connections in futures prop. Firms license one or several; platform choice normally does not change the plan price, but it changes which tools and mobile apps you get.

Withdrawal (Payout Request)

The formal request to receive your profit share, paid by transfer, Wise, crypto or check depending on the firm and your country. First payouts require KYC.

Weekend Holding

Keeping positions open over the weekend. Most futures prop firms forbid it (markets close Friday, gap risk on Sunday reopen). Some CFD firms allow it on swing plans.

Overnight Holding

Keeping positions past the daily session close. Many intraday-drawdown plans forbid it; EOD plans often allow it. Breaking the rule can void the day's profit or the account.

Copy Trading

Mirroring trades across accounts or from another trader. Between your own accounts at the same firm it is often allowed; across firms or from signal groups it is usually a ban-level violation.

HFT / Latency Exploits

Automated high-frequency strategies that exploit sim-environment quirks (fill latency, spread arbitrage). Banned everywhere, and the most common reason firms void 'too good to be true' evaluation passes.

Martingale / DCA

Adding to a losing position to average the entry price. Some firms explicitly ban it, others cap it (e.g. one extra entry). In a drawdown-limited account it is the fastest known way to breach.

Hedging

Holding opposite positions in the same or correlated instruments. Inside one prop account it is usually pointless and sometimes banned; across two firms' accounts it violates most terms of service.

Stopout

A forced close of your positions by the risk engine, triggered when you touch a loss limit. In prop accounts a stopout usually means the account is already breached.

Spread

The gap between the best buy and sell price. In CFD prop firms the spread is a real cost per trade; in exchange-traded futures it is usually one tick on liquid contracts.

Lot (CFD)

The position unit at forex/CFD firms: 1.0 lot of EURUSD is 100,000 units, about $10 per pip. The CFD equivalent of contracts in futures.

Pip / Point

Price increments: a pip is the 4th decimal in most forex pairs; a point is one full index unit. Their dollar value per lot/contract is what converts a stop distance into risk.

Risk-Reward Ratio

How much you aim to win per unit risked. 2R means targeting $600 while risking $300. Prop rules force positive expectancy math: with 1R risk of 1% of drawdown, a 40% win rate at 2R still grows the buffer.

Equity vs Balance

Balance counts only closed trades; equity includes open positions. Trailing drawdown usually follows EQUITY, which is why an open winner you gave back can breach an account whose balance never fell.

Live Account

An account where trades hit the real market with the firm's capital, as opposed to sim-funded. A minority of futures prop traders reach this tier; it typically comes with the best splits.

Gauntlet

Earn2Trade's evaluation program name, often used generically for longer exam-style evaluations with fixed durations rather than open-ended ones.

Verification Phase

The second step of a two-step challenge, usually with a lower target than phase one. Same rules, smaller hill.

Account Size

The nominal capital of the plan ($25K, $50K, $100K). It sets contract limits and drawdown in dollars; it is not money you can withdraw. A '$100K account' with $3,000 trailing drawdown is really a $3,000 risk budget.

Max Position Size

The largest number of contracts or lots you may hold at once, set per plan. Exceeding it even for seconds counts as a violation at strict firms.

Payout Cycle

How often you can request withdrawals: on demand, weekly, biweekly or monthly. Combined with minimums and caps, it defines how fast profit becomes cash in your bank.

Coupon Stacking

Trying to combine two discount codes on one purchase. Checkouts accept only one code; what does stack at some firms is a code on top of an automatic sale price, which is why we test both and publish the final number.

Trustpilot Rating

The public review score of a firm. We show it on every card and rank firms by it on Highest Rated Prop Firms. A high score with a large review count beats a perfect score with 40 reviews.

Flip (Account Flipping)

Trying to pass evaluations fast with oversized risk, treating the fee as a lottery ticket. Consistency rules, scaling plans and minimum days exist specifically to make flipping unprofitable.

Swing Plan

A plan type that allows holding overnight and through news, usually with wider targets and higher prices. The right tool if your strategy holds for days instead of minutes.

Reset Anchor Price

The discounted price a firm offers to restart a failed challenge. If a reset costs more than a fresh evaluation with our coupon, the coupon wins: always compare both before paying a reset.

Sim Environment

The simulated market where evaluations and sim-funded accounts run. Fills can be slightly friendlier than the live book, which is why strategies that only work in sim (latency abuse) are banned.