Prop firm rulebooks use a lot of jargon, and small differences in wording can decide whether you pass. Here are the 30 terms you are most likely to meet, each in one sentence. Where a term deserves more, we link to a full guide.
Where to start
- The most important terms are the drawdown ones. Start with static vs trailing drawdown.
- Then the daily loss limit and hard vs soft breaches.
- Before you pay, read 10 questions to ask any prop firm.
| Term | What it means |
|---|---|
| Assessment (evaluation, challenge) | The test you pay for. Hit the target without breaching and you move to a funded account. |
| Funded account | The account you trade after passing, where you keep a share of the gains. |
| Profit target | The gain you need to reach to pass an assessment or phase. |
| Profit split (account gains) | Your share of the gains in a funded account, often 75% to 90%. |
| Daily loss limit (daily drawdown) | The most the account can fall within one trading day. |
| Max drawdown | The overall floor for the account. Touch it and the account is breached. |
| Static drawdown | A floor fixed from the starting balance that never moves. |
| Trailing drawdown | A floor that follows the account’s high point upwards. |
| Intraday trailing | Trailing that updates in real time, including open trades. |
| End-of-day trailing | Trailing that only updates at the daily close. |
| High-water mark | The highest value the account has reached; trailing drawdowns are measured from it. |
| Balance | Account value from closed trades only. |
| Equity | Balance plus or minus the profit or loss on open trades. |
| Hard breach | A rule break that fails the assessment or closes the funded account. |
| Soft breach | A rule break where the offending trades are closed but the account stays open. |
| Consistency rule | A cap on how large your best day can be as a share of total profit. |
| Inactivity rule | A limit on how long the account can go without a trade. |
| Minimum trading days | The fewest days you must trade before you can pass. |
| Time limit | The deadline to hit the target in an assessment, where one applies. |
| Profit buffer | Profit that must be built and kept before a first payout. |
| Payout cycle | How often you can request a payout, for example every 7, 14 or 30 days. |
| Lock upon payout | After a first payout, the drawdown floor locks at the starting balance. |
| Payout protector | An add-on that pays your share of gains even if a funded account is breached. |
| Instant funding | A funded account from day one, with no assessment, usually with tighter rules. |
| KYC | Know Your Customer identity checks, required before you can be paid. |
| Trader agreement | The contract you sign before trading a funded account. |
| Simulated account | An account priced on real market data but not routed to a live exchange. |
| News trading rule | A restriction on opening trades around scheduled news releases. |
| Scaling | Growing your funded allocation over time by meeting milestones. |
| Prediction market | A market in Yes/No contracts on real-world events that settle at $1 or $0. |
Go deeper
- What is a funded trading account?
- Consistency rules explained
- How prop firm payouts work
- Instant funding vs evaluation
- How to pass a prediction market evaluation
Trading involves substantial risk. TradePath evaluations and funded accounts are simulated. This guide is general education, not financial advice. Rules can change; the program rules for the product you buy are what apply.
PROVE YOUR EDGE. FUND YOUR FUTURE.