Prop Firm Glossary (Futures)

A

Activation fee

A one-time fee some prop firms charge after you pass evaluation to begin the funded stage.

B

Balance

Usually realized P&L from closed trades. Compare it with equity.

Balance-based drawdown

A drawdown rule that references balance rather than open-trade equity. See Equity versus balance.

C

Consistency rule

A rule limiting how much profit can come from one day, one trade, or a short payout window. See Consistency rule explained.

Consistency ratio

Often calculated as largest winning day divided by total profit. Firms commonly require it to stay under a threshold such as 30 to 40 percent.

Contract limit

The maximum position size or maximum number of contracts allowed by the rulebook or scaling plan.

D

Daily loss limit (DLL)

The maximum loss allowed in one trading day. Exceeding it can lock or fail the account. See Daily loss limit.

Drawdown

The maximum loss allowed before the account fails. This is usually the real risk budget. See Drawdown explained.

E

End-of-day (EOD) drawdown

A drawdown calculation based on a session-close snapshot. The exact intraday treatment still varies by firm.

Equity

Usually balance plus unrealized P&L from open trades.

Equity-based drawdown

A drawdown rule that looks at open-trade equity instead of closed-trade balance. Open losses can matter immediately.

Eval time limit

A maximum number of calendar days or billing cycles allowed to complete the evaluation, if the firm imposes one.

Evaluation

The paid audition phase where you must hit a profit target without breaking risk rules.

F

Funded account / funded stage

The stage after passing evaluation where withdrawals may become possible under ongoing rules. Depending on the firm, funded can be simulated, live, or hybrid.

H

Hard breach

A terminal rule violation that usually ends the account immediately. See Soft versus hard breach.

High-water mark (HWM)

The highest equity or balance point referenced by a trailing drawdown model.

I

Inactivity rule

A requirement to place a trade or maintain activity within a certain period so the account stays in good standing.

K

KYC

Know Your Customer identity checks used before payouts or account approval. Requirements vary by firm and jurisdiction.

M

Max loss limit

Another phrase for drawdown or maximum allowed loss, depending on the rulebook.

Micros and minis

Smaller and larger futures contract variants. Firms may allow both but apply different size limits or approved instruments.

Minimum trading days

A requirement to trade at least a certain number of distinct days before passing or before requesting a payout.

N

No-DCA language

Rulebook language that restricts or forbids averaging down or layering into a losing position.

No hedging rule

A rule prohibiting simultaneous long and short positions in the same instrument or a related coordination pattern.

No-martingale language

Rulebook language that restricts increasing size after losses in a recovery-style progression.

O

Overnight hold

A position carried beyond the firm's allowed close time or into the next session, if the rulebook permits it.

P

Payout / withdrawal

A request to withdraw eligible profits under the firm's payout policy.

Payout cap

A maximum amount that can be withdrawn in one request or over one payout period.

Profit split

The percentage of eligible profits the trader keeps versus the portion the firm keeps.

Profit target

The profit level required to pass an evaluation or unlock a milestone.

R

Realized P&L

Profit or loss from trades that have been closed.

Reserve / payout buffer

An amount of profit that must remain in the account before or after a payout request.

Reset

A paid restart after failing an evaluation or breaking a rule state, if the firm offers one.

Rulebook / disclosures

The written source of truth for rules, fees, payouts, and simulated-performance disclosures. Always verify current versions directly.

S

Scaling plan

The schedule or rule set for increasing size or capital over time.

Simulated account

An account that uses simulated routing or execution logic even if it displays real market data and may still pay withdrawals under the firm's policy.

Snapshot time

The exact time when a firm records equity, balance, or drawdown for an end-of-day rule.

Soft breach

A non-terminal rule problem that may trigger review, restriction, delayed payout, or a chance to restore compliance.

Static drawdown

A fixed drawdown floor that does not move as profits increase.

T

Trailing drawdown

A moving drawdown floor calculated from the high-water mark minus a drawdown amount.

Trailing threshold

A point where the trailing drawdown stops rising, caps at starting balance, or changes to another model.

U

Unrealized P&L

Profit or loss on an open position that has not yet been closed.

W

Weekend hold

A position carried through the weekend close-to-reopen gap, if the firm's rules allow it.