Prop firm glossary: the words you'll keep seeing
Prop trading has its own vocabulary. These are the words you'll meet most often, explained simply.
Words about the challenge
Challenge / evaluation: the test you pay for in order to get funded.Phase / step: a stage of the challenge with a target of its own.Profit target: the percentage gain you need to pass a phase.Minimum trading days: the fewest days you must trade before you can pass.Words about risk
Daily loss limit: the most you can lose in a single day.Maximum loss / drawdown: the most the account can fall in total.Static drawdown: a limit fixed from the starting balance.Trailing drawdown: a limit that moves up with your highest balance.Consistency rule: a cap on how much one day can add to your total profit.Words about payouts
Profit split: the share of the profit you keep.Scaling plan: a way to grow into a bigger account or a higher split.Refundable fee: a fee that's returned to you with a payout.KYC: identity checks before you're funded or paid.Pay after pass: a small fee to start, with the rest due only if you pass.Questions people ask
What does being funded mean?
It means you've passed the challenge and now trade the firm's account in return for a share of the profit.
What is a hard breach?
A rule break that closes the account straight away, such as hitting the maximum loss.