Glossary
The trading jargon prop firms use, explained in plain words.
- Drawdown
- The maximum loss allowed on the account. If your balance (or equity) touches it, the account is lost.
- Trailing drawdown
- A drawdown that follows your highest balance: each new high raises the floor.
- EOD (end of day)
- Calculated at the session close. An EOD drawdown only moves up once a day, but it is still enforced in real time.
- Consistency rule
- No single day can exceed a percentage of total profit (often 40%). A very big day therefore raises the profit you need.
- Payout
- A withdrawal of your profits from a funded account, under the firm's conditions.
- Challenge / evaluation
- The paid phase where you must hit a target without breaking the rules to get a funded account.
- Scaling
- Gradually increasing the number of contracts or the account size as you make profit.
- Buffer
- A profit cushion you must keep above the drawdown before you can withdraw.