8 terms

Glossary

The trading jargon prop firms use, explained in plain words.

Drawdown: The maximum loss allowed on the account. If your balance (or equity) touches it, the account is lost.; See it with an example →
Trailing drawdown: A drawdown that follows your highest balance: each new high raises the floor.; See it with an example →
EOD (end of day): Calculated at the session close. An EOD drawdown only moves up once a day, but it is still enforced in real time.; See it with an example →
Consistency rule: No single day can exceed a percentage of total profit (often 40%). A very big day therefore raises the profit you need.; See it with an example →
Payout: A withdrawal of your profits from a funded account, under the firm's conditions.; Try the payout calculator →
Challenge / evaluation: The paid phase where you must hit a target without breaking the rules to get a funded account.; Work out the true cost →
Scaling: Gradually increasing the number of contracts or the account size as you make profit.
Buffer: A profit cushion you must keep above the drawdown before you can withdraw.; See it with an example →

Rules explained with worked examples

Each drawdown type, the daily limit, the consistency rule and payout buffers, played out on a $50K account day by day.