Prop firm glossary: every term in plain words
Prop trading has its own vocabulary. These are the terms you'll see most, explained simply.
Challenge words
Challenge / evaluation: the paid test that leads to funding.Phase / step: one stage of the test, each with a target.Profit target: the gain required to clear a phase.Minimum trading days: the fewest days you must trade before passing.Risk words
Daily loss limit: the biggest loss allowed in one day.Maximum loss / drawdown: the biggest total fall allowed.Static drawdown: a floor fixed from the opening balance.Trailing drawdown: a floor that rises with your peak balance.Consistency rule: a cap on one day's share of total profit.Payout words
Profit split: the share of profit you keep.Scaling plan: a path to a bigger account or higher split.Refundable fee: a fee returned with a payout.KYC: identity checks before funding or payout.Pay after pass: a small start fee, with the rest due only on passing.Common questions
What does funded mean?
You've passed and now trade the firm's account for a share of the profit.
What is a hard breach?
A rule violation that closes the account at once, such as hitting the maximum loss.