Every Prop Trading Term, Explained

A rule requiring that no single trading day generates more than a set percentage of your total profits, preventing traders from 'getting lucky' on one big day.

A method where one trader's positions are automatically replicated on another account, banned by most prop firms to prevent coordinated manipulation of their risk books.

The maximum amount you are allowed to lose within a single trading day before your account is automatically suspended.

The trading test period(s) a trader must pass — hitting profit targets while respecting all risk rules — before receiving a live funded account.

An automated trading script (bot) running on MetaTrader 4 or 5 that executes trades based on pre-programmed rules without manual intervention.

The overall loss limit from your starting balance (or peak balance) that, if hit, terminates your account permanently.

The minimum number of calendar or trading days a trader must be active in the market before being allowed to pass a challenge phase, even if the profit target is already met.

A strategy of trading around high-impact economic news events. Many prop firms restrict or ban it due to extreme volatility and slippage risks.

How often a funded trader can request and receive their share of profits from a prop firm — ranging from weekly to monthly.

The percentage of trading profits a funded trader keeps versus what is paid to the prop firm, typically ranging from 70% to 95% in the trader's favour.

The minimum profit percentage a trader must earn to pass each phase of a prop firm challenge before moving to the next stage or receiving a funded account.

A structured programme allowing funded traders to grow their account size by hitting consistent profit targets, rewarding successful traders with more capital.

A trading style focused on capturing very small price movements by opening and closing positions within seconds to minutes, often involving high trade frequency.

A fixed maximum loss limit calculated from your starting account balance that never changes regardless of profits made.

A drawdown limit that moves up as your account balance increases, locking in a higher floor rather than staying fixed from the start.