Prop trading terms, plain
No jargon. No sales pitch. Just what each term means and why it matters to your account.
Evaluation (Challenge)
The paid test you pass to get a funded account. You hit a profit target without breaking the loss rules.
Funded account
A simulated or live account the firm lets you trade after you pass. Your profit is split with the firm.
Profit split
The share of profit you keep. Common splits run from 80/20 up to 100% on a first tranche, then 90/10.
Why it matters: A better split only helps if you actually withdraw.
Activation fee
A one time or monthly charge to turn on a funded account after passing. Easy to forget when comparing costs.
Reset
Paying to restart a failed evaluation instead of buying a new one.
Why it matters: Resets are where the real cost hides.
Trailing drawdown
A maximum loss line that trails your account's peak upward, then usually locks at the starting balance once you are funded enough.
Why it matters: It can stop you out even after a green run.
End of day trailing
The drawdown line updates once per day on the closing balance. Friendlier, because intraday spikes do not move your stop out line.
Intraday trailing
The drawdown line updates on your highest unrealized peak during the day. Harsher, because a wick you never banked can tighten your room.
Daily loss limit
The most you can lose in one day before the account locks.
Why it matters: A hard personal stop should sit inside this number, not at it.
Consistency rule
A cap on how much of total profit can come from your single best day. Pushes steady results over one lucky session.
Scaling plan
Rules that raise your contract limit as the account grows.
Why it matters: Scale by adding accounts, not by doubling size on one.
Payout (withdrawal)
Moving realized profit off the account to your bank. Speed and minimums vary by firm. Take them early.
Tick value
The dollar value of the smallest price move for a contract. Knowing it is how you turn a stop in ticks into real dollars of risk.
Micro vs mini
Micros are one tenth the size of minis.
Why it matters: Micros let you size precisely and survive longer while you prove an edge.
Expectancy
Your average result per trade, win rate and average win and loss combined. Negative expectancy means no size is safe. Our tools say so plainly.
Drawdown, trailing lock, and position size are all live in the free tools. The setups behind entries and exits are taught in the course. To see these terms play out on real trades, read the Forward Log.
Missing a term? Tell us and we will add it.