A
Account Balance – The total amount of money in a trading account, excluding open trades.
Account Breach – A violation of a prop firm’s trading rules that results in account disqualification.
Active Trading Days – The number of separate days a trader must place at least one trade to meet evaluation requirements.
Aggressive Trading – A high-risk style involving large position sizes, low risk control, or inconsistent behavior.
Allocation – The amount of virtual capital assigned to a trader after passing an evaluation.
Altcoins – Any cryptocurrency that is not Bitcoin (e.g., Ethereum, Solana, Cardano).
Ask Price – The lowest price a seller is willing to accept for an asset.
Assets – Anything of value that can be traded (stocks, currencies, commodities, or cryptocurrencies).
Automated Trading (Algo Trading) – Using software or bots to execute trades without manual input.
B
Backtesting – Testing a strategy using historical data to assess past performance.
Balance Drawdown Limit – The maximum decrease in account balance allowed before breaching rules.
Balance – The amount of money in an account before considering open trades.
Bear Market – A market in which prices are consistently falling.
Bid Price – The highest price a buyer is willing to pay for an asset.
Bitcoin (BTC) – The first and most well-known cryptocurrency.
Blockchain – A decentralized digital ledger that records transactions securely.
Breakeven – When profits and losses cancel each other out.
Breakeven Rule – A trading rule requiring SL to be moved to breakeven after a certain profit level.
Bull Market – A market in which prices are consistently rising.
C
Candlestick – A chart type showing open, high, low, and close prices over time.
Challenge Account – The first stage of a prop firm evaluation.
Commission – A fee charged by brokers or firms for executing trades.
Consistency Rule – A rule preventing traders from making most profits in just a few trades.
Copy Trading Restriction – Rule disallowing copying trades from other traders or signal providers.
Correlation – The degree to which two assets move in relation to each other.
Credentials Sharing – Prohibited practice of sharing login credentials.
Crypto Pair – A pair of cryptocurrencies traded against each other (e.g., BTC/ETH).
Crypto-to-Fiat Pair – A cryptocurrency traded against a fiat currency (e.g., BTC/USD).
Currency Pair – Two currencies traded in the forex market (e.g., EUR/USD).
D
Daily Drawdown – The maximum allowable loss in a single day.
Dashboard – A trader’s portal for monitoring performance and progress.
Day Trading – A strategy where trades are opened and closed within the same day.
Diversification – Spreading investments across different assets to reduce risk.
Drawdown – The reduction in your account balance from its highest point (peak) to its lowest point (trough) due to losing trades.
In balance-based drawdown models (commonly used by prop firms), the drawdown is calculated based on the account balance only, not the floating equity. This means unrealized profits do not raise the drawdown threshold — only closed profits do.
Exceeding the maximum drawdown limit results in account breach and loss of funding.
E
Equity – The account balance plus or minus the result of open trades.
Evaluation Account – The account used during the challenge phase.
Evaluation Period – The timeframe in which the challenge must be completed.
Execution – The process of placing a trade.
Execution Speed – The time it takes for a trade to be processed.
F
Fiat Currency – Government-issued currency not backed by a physical commodity.
Forex (FX) – The foreign exchange market.
Free Margin – The funds available to open new positions.
Funded Account – A trading account using the firm’s capital after passing an evaluation.
Funded Trader – A trader who is trading with a firm’s capital.
Funding Agreement – The contract outlining terms and conditions of a funded account.
G
Gambling Behavior – Extremely risky behavior like overleveraging or revenge trading.
Gas Fees – Blockchain transaction fees.
Growth Scaling Plan – A program to increase account size based on performance.
H
Hedge – Holding opposing positions to reduce risk.
Hedging Restriction – Rule that may prohibit holding long and short positions on the same asset.
High-Frequency Trading (HFT) Ban – Restriction against rapid automated trading bots.
High-Impact News – Economic events that significantly move markets.
I
Inactive Trader Policy – Accounts may be deactivated if left idle for extended periods.
Index – A measure of the value or performance of a group of assets (e.g., S&P 500).
L
Leverage – Borrowed funds used to increase trade size.
Leverage Cap – The maximum allowed leverage.
Liquidity – How easily an asset can be traded without affecting its price.
Locked Account – An account that’s suspended due to a rule violation.
Lot Size – The standardized number of units in a trade.
M
Margin – The collateral required to open a leveraged trade.
Market Order – An order to buy/sell at the best available price.
Maximum Daily Loss – The max amount that can be lost in one day.
Maximum Drawdown – The maximum overall loss allowed.
Minimum Trading Days – The least number of trading days required to complete a challenge.
Momentum – The strength of a price movement.
P
Payout Cycle – Schedule for profit withdrawals (e.g., bi-weekly, monthly).
Pip – The smallest unit of price movement in trading. In Forex, for pairs like EUR/USD, 1 pip = 0.0001. For example, if EUR/USD moves from 1.1050 to 1.1051, that’s a 1 pip move. Pips are also used in Gold, Crypto, and Indices.
Position – An open trade (buy or sell).
Processing Fee – A charge that may apply to withdrawals.
Profit Split – The percentage of profits kept by the trader (e.g., 80/20).
Prop Firm Rules – Guidelines set by a prop firm for funded accounts.
Prop Trading – Trading with a firm’s capital instead of personal funds.
R
Refund Policy – Conditions under which challenge fees may be refunded.
Risk Desk – Internal team that monitors trader activity and compliance.
Risk Management – Strategies to limit potential losses.
Risk-to-Reward Ratio (RRR) – A comparison of potential reward vs. risk in a trade.
S
Scaling Plan – Program to increase account size based on performance milestones.
Scalping – A trading strategy focused on quick, small profits.
Slippage – The difference between expected and actual execution prices.
Spot Market – Market where assets are traded for immediate delivery.
Spread – The difference between the bid and ask price.
Stablecoin – A crypto asset pegged to a stable value (e.g., USDT).
Stop Loss (SL) – An automatic order to limit losses.
T
Take Profit (TP) – An automatic order to lock in profits.
Target Profit – The goal amount needed to pass an evaluation.
Trading Day – A full 24-hour session in forex or regular stock hours.
Trading Psychology – The mindset and discipline required for successful trading.
Trading Volume Limit – A cap on the number of lots allowed.
Trend – The general direction of price movement over time.
W
Withdrawal Request – The formal process to request payout of profits.