A paid assessment in which a trader must reach a defined profit target while staying within drawdown limits. Passing the challenge grants access to a funded account.
A restriction that prevents any single trading day from representing more than a specified percentage (commonly 30 to 50 percent) of total profits during the payout period. Designed to ensure profits are distributed across multiple sessions rather than concentrated in a single outsized day.
The maximum loss permitted within a single trading session, calculated from the session's starting balance or highest equity point. Breaching this limit typically pauses trading for the remainder of the day or terminates the account entirely, depending on the firm and account phase.
The peak to trough decline in account equity. In the prop context, drawdown rules define how much loss a trader can sustain before the account is terminated.
A trailing drawdown variant that updates the floor only at the close of each trading session, based on the closing balance rather than intraday equity peaks. More forgiving than intraday trailing because temporary unrealised gains during the session do not permanently raise the floor.
An automated trading programme that executes trades on behalf of the trader based on predefined rules and algorithms. Most commonly built for MetaTrader platforms using the MQL4 or MQL5 programming languages.
The account granted to a trader after passing the evaluation phase. The trader manages the account according to the firm's rules and receives a percentage of profits generated.
A drawdown calculation method where the loss floor adjusts upward in real time based on the highest equity point reached during the trading session, including unrealised gains. The most restrictive drawdown model.
The total loss permitted from the initial account balance (static) or from the highest equity point reached (trailing) before the account is terminated.
The percentage of profits retained by the trader on the funded account. The remaining percentage goes to the firm. Common splits range from 80/20 to 95/5, with some firms offering 100 percent retention at advanced scaling tiers.
A programme that increases the trader's funded account size based on sustained profitability. Scaling milestones are typically defined by consecutive months of positive performance. Maximum scaling caps range from $400,000 (FTMO) to $4 million (The5ers, FundedNext).
A trading account that mimics real market conditions (prices, spreads, execution) but does not interact with actual market liquidity. The vast majority of prop firm evaluations and funded accounts operate in a simulated environment.
A drawdown model where the maximum loss threshold is calculated from the initial account balance and never adjusts, regardless of subsequent account growth. The most trader friendly drawdown structure. Used by FTMO, FundedNext, The5ers and DNA Funded.
A drawdown model where the maximum loss threshold adjusts upward as the account equity reaches new highs. Once raised, the threshold does not decrease. Used by Apex Trader Funding and Topstep.
