Prop firm rulebooks reuse the same twenty words to mean different things. Trailing drawdown at one firm resets nightly and at another it moves on every tick, and both call it trailing. This glossary defines the term, then tells you how many of our 171 firms do it each way, because the distribution is the part that decides whether a rule matters to you.

Challenge and evaluation

Prop firm

A firm that funds traders on its own capital or a simulated equivalent, takes a share of the profits, and absorbs the losses. Our directory tracks 171 of them across seven markets. Most sell an evaluation rather than hiring, which makes them a product business as much as a trading one.Read more on prop firm

Challenge

The paid evaluation a trader passes to reach a funded account, also called an evaluation, assessment or audition. Cost, target and rules vary enormously, so the word on its own tells you almost nothing.Read more on challenge

One-step challenge

A single evaluation phase with one profit target, available at 133 of 171 firms. Easier to pass in fewer trading days, and usually paired with a tighter drawdown to compensate.Read more on one-step challenge

Two-step challenge

Two sequential phases, typically a higher target in phase one and a lower one in phase two. Still the most common format at 135 of 171 firms, and generally cheaper per unit of funding than one-step.Read more on two-step challenge

Instant funding

A funded account issued on purchase with no evaluation, offered by 47 of 171 firms. The trade is almost always a smaller account, a tighter drawdown and a lower initial split.Read more on instant funding

Profit target

The gain required to pass a phase, quoted as a percentage of starting balance. Read it against the drawdown rather than alone, because a 10 percent target with 5 percent drawdown is a far harder ask than 10 percent with 10 percent.Read more on profit target

Minimum trading days

A floor on how many days you must trade before passing. Only 36 of 171 firms remove it entirely, so most traders cannot pass in a single session even with the target hit.

Time limit

A deadline to complete a phase, now the exception rather than the rule at 121 of 171 firms imposing none. Watch for firms that drop the time limit but bill monthly, because the meter replaces the deadline.Read more on time limit

Reset

Paying to restart a failed evaluation rather than buying a new one. Usually cheaper than a fresh challenge. Firms that sell resets in bundles are telling you something about expected failure rates.

Add-on

A paid upgrade bought at checkout that changes the rules: a wider drawdown, a higher split, more leverage, or removal of a stop-loss requirement. Add-ons are why an advertised headline figure is often not the one you get.

Activation fee

A charge levied when a passed account converts to funded, separate from the challenge fee. Often refunded on the first payout, which means it is only free if you actually get paid.

Refundable fee

A challenge fee returned once you reach a payout, offered by 21 of 171 firms. The refund is contingent on performance, so treat it as a rebate rather than a discount.Read more on refundable fee

Drawdown and risk limits

Drawdown

The maximum your account may fall before it is closed. The single most important number in any rulebook, and the one with the most variation in how it is measured.Read more on drawdown

Static drawdown

A loss limit fixed against your starting balance that never moves, used by 69 of 171 firms. The most forgiving model, because every dollar of profit becomes a permanent buffer.Read more on static drawdown

Trailing drawdown

A loss limit that follows your account upward as it grows, so profits raise the floor beneath you. Harsh in practice, because a winning run can leave you breaching while still above your starting balance.Read more on trailing drawdown

End-of-day drawdown

A trailing limit that only moves up at the daily close rather than on every new high, offered by 17 of 171 firms. Materially kinder than intraday trailing, because a spike during the session does not permanently raise your floor.Read more on end-of-day drawdown

Intraday drawdown

A trailing limit that updates in real time on every new equity peak. The strictest common model, and the reason traders breach on days they finished green.Read more on intraday drawdown

Balance-based drawdown

A limit measured on closed trades only. Open positions cannot breach you, so a deep unrealised loss that recovers costs nothing.Read more on balance-based drawdown

Equity-based drawdown

A limit measured on live equity including open positions. Far stricter, because an unrealised spike can close the account before you have taken a single loss.Read more on equity-based drawdown

High-water mark

The highest balance or equity your account has reached. Trailing drawdown is measured from it, so the high-water mark is what sets your floor.

Drawdown lock

The point at which a trailing limit stops trailing and becomes fixed, usually once profit reaches a set percentage. The most valuable clause in a trailing rulebook, and the one most often buried.

Daily loss limit

A cap on losses within one trading day, separate from the overall drawdown. Only 24 of 171 firms operate without one. Check whether it resets on balance or equity, and at what hour.

Breach

Crossing a loss limit, which closes the account. Breach detection is automated, so intent and context do not apply.

Leverage

The multiple of account size you may control. Higher leverage brings both the target and the drawdown into reach faster, which is why firms with tight drawdowns usually cap it.Read more on leverage

Value at risk

A statistical estimate of the loss a portfolio could suffer over a period at a given confidence level. Used by firms to size risk internally rather than imposed on traders directly.Read more on value at risk

Payouts and profit

Profit split

The share of gains you keep. 41 of 171 firms advertise a route to 100 percent. Check whether the headline split is standard or an add-on, and whether it applies from the first payout or only after scaling.

Payout cycle

The period between eligible payouts, commonly 14 or 30 days. Some firms restart the cycle from the request date rather than the payment date, which quietly shortens the wait.

Payout cap

A ceiling on how much you may withdraw per request, usually tightest on the first few payouts. A cap turns one strong month into several months of withdrawals.

Minimum payout

The floor you must clear before requesting money. High minimums on small accounts can mean months of trading before a first withdrawal is even possible.

On-demand payout

Withdrawal whenever you choose rather than on a fixed schedule, offered by 30 of 171 firms. Usually still gated by a minimum or a qualifying-days requirement.

Qualifying winning day

A day that counts toward payout eligibility, typically requiring a minimum realised profit. Firms using this rule often require eight or more per cycle, which is a heavier gate than the profit split suggests.

Consistency rule

A limit on how much of your total profit may come from a single day or trade. 59 of 171 firms operate without one. Where it exists it is the most common reason a passed account is failed on review.Read more on consistency rule

Scaling plan

A published path to a larger account based on sustained performance. Read the discretion clause, because many plans reserve the right to refuse scaling for any reason.

Funded trader salary

A fixed monthly payment some firms add on top of the profit split for consistent traders. Rare, and usually tied to demanding monthly return requirements.

KYC and AML

Identity and anti-money-laundering checks required before a funded account is issued or a payout released. Standard practice, though a mismatch between your verified name and your payout details is a common cause of held payments.

Rules and restrictions

Expert advisor

An automated trading program, usually on MetaTrader, permitted at 61 of 171 firms. Bans are often partial, allowing custom code while blocking off-the-shelf challenge-passing bots.Read more on expert advisor

News trading

Holding positions through scheduled high-impact economic releases, allowed at 65 of 171 firms. Restrictions are usually a time window around the event rather than a blanket ban.

Copy trading

Mirroring one strategy across multiple accounts. Frequently allowed within a single trader’s own accounts and prohibited across unrelated traders, which makes it a rule about collusion rather than automation.Read more on copy trading

Hedging

Holding opposing positions on the same instrument. Usually permitted inside one account and prohibited across accounts or across firms, because cross-account hedging transfers the risk to the firm.

Latency arbitrage

Exploiting delays between a firm’s price feed and the underlying market. Universally banned and actively monitored, and one of the few violations that reliably voids payouts.

Tick scalping

Taking very short-duration trades for a few points. Often restricted by a minimum hold time rather than an outright ban.

Ticker whitelist

A published list of the only instruments you may trade. Common in options funding, where a firm may fund a few hundred symbols or as few as three.Read more on ticker whitelist

Overnight holding

Keeping positions open past the daily close. Standard in forex, restricted or banned in most futures and options programmes, and worth confirming before building any swing strategy.

Weekend holding

Carrying positions through the weekend close. Rarer than overnight permission, and often the difference between a swing strategy working and not.

Stop-loss requirement

A rule that every position must carry a stop. Some firms sell removal of this requirement as a paid add-on, which tells you it is a real constraint rather than guidance.Read more on stop-loss requirement

Firm models and money flow

Simulated funding

A funded account that trades a demo environment while payouts come from firm revenue. The dominant model, and the reason most firms describe themselves as educational rather than financial.Read more on simulated funding

Live funding

A funded account routed to real market execution. Rare, and usually reached only after sustained performance on simulated capital.

A-book

A model where client orders are passed through to the real market and the firm earns from spread or commission. The firm profits when you trade, not when you lose.Read more on a-book

B-book

A model where the firm takes the other side of client orders internally. The firm profits when you lose, which is the conflict of interest most prop firm criticism points at.Read more on b-book

Hybrid model

Routing profitable traders to the real market and internalising the rest. The commercially common answer, and the one most firms decline to describe publicly.Read more on hybrid model

Market maker

A counterparty that quotes both sides of a market and profits from the spread. Distinct from a prop firm, though prop firms usually depend on one for pricing.Read more on market maker

Discount code

A promotional code reducing the challenge fee. Common enough that list prices are frequently notional, so treat a permanently discounted headline as the real price.Read more on discount code

Firm closure

A prop firm ceasing operations, usually taking unpaid balances with it. Frequent enough in this industry to justify checking a firm is still trading before you buy.Read more on firm closure

Instruments and platforms

CFD

A contract for difference, settled against price movement without owning the underlying. The dominant instrument in prop trading, covering 108 of the 171 firms we track.Read more on cfd

Futures contract

A standardised exchange contract to buy or sell at a set date, traded at 34 firms in our directory and typically on CME, COMEX, NYMEX and CBOT.Read more on futures contract

Listed option

A real exchange-traded option with a strike, an expiry and assignment risk. Genuinely rare in prop funding, offered by four firms in our directory.Read more on listed option

CFD option

A broker-written contract tracking an option price without giving you the contract. No assignment, no exercise, and no way to run a strategy that depends on expiry.Read more on cfd option

Options on futures

Exchange options written on a futures underlying, often recommended as the accessible route to options funding. Verify availability, because several large futures firms prohibit options outright.Read more on options on futures

Prediction market

A market where contracts settle on the outcome of a real-world event. A young prop category covering eight firms in our directory.Read more on prediction market

Sports prop firm

A firm funding sports bettors on the same evaluation model used for traders. Eleven firms in our directory, and the rules borrow heavily from trading drawdown language.Read more on sports prop firm

Trading platform

The software a firm gives you. MT5 leads at 57 firms, then cTrader at 38, Match-Trader at 32, TradeLocker at 23 and TradingView at 20. Platform choice constrains strategy more than most traders expect.Read more on trading platform