Prop firm rules explained

Profit target

How much you need to make, as a percentage of the starting balance, to pass a phase of the challenge.

Example: On a $100K account an 8% target means reaching $108,000 in profit-and-loss before the phase ends. Two numbers like 8% / 5% mean phase one, then phase two.

Daily loss limit

The most you can lose in a single trading day. Break it once and the account fails, even if you're up overall.

Example: With a 5% daily limit on a $100K account you can't lose more than $5,000 in one day. Some firms count open trades, some only closed ones.

Max loss (drawdown)

The furthest your account can fall before it fails. How it's measured matters as much as the size.

Example: A 10% max loss on $100K means the account fails at $90,000 if the limit is static. If it trails, that floor moves up as you profit.

Static drawdown

The loss floor is fixed at the starting balance minus the limit and never moves.

Example: $100K account, 10% static: the floor stays at $90,000 no matter how much you make. This is the most forgiving type.

Trailing drawdown (end of day)

The loss floor follows your highest end-of-day balance upward. Gains made and given back within the same day don't move it.

Example: $50K account, $2,000 trailing: close a day at $51,000 and the floor moves from $48,000 to $49,000. It never moves back down.

Trailing drawdown (intraday)

The loss floor follows your highest balance at any moment, including unrealized profit on open trades. This is the strictest type.

Example: $50K account, $2,000 trailing: a trade that is briefly up $1,500 moves the floor to $49,500, even if you close it at breakeven.

Trailing, locks at breakeven

The loss floor trails your gains until it reaches the starting balance, then stops moving.

Example: $50K account, $2,000 trailing: once you're up $2,000 the floor locks at $50,000 and stays there.

Profit split

Your share of the profits you make on the funded account. The firm keeps the rest.

Example: With an 80% split, $5,000 of profit pays you $4,000.

1-Step, 2-Step and instant funding

The number of evaluation phases you must pass before you're funded. Instant funding skips the evaluation, usually for a higher fee and tighter rules.

Activation fee

A one-off charge some firms, mostly futures firms, take when you pass and they set up your funded account. Add it to the price when comparing.

Monthly vs one-time price

One-time challenges are paid once per attempt. Monthly challenges bill again every month until you pass or cancel, so a slow pass costs more.

Example: A $100/month challenge you pass in month three cost $300, plus any activation fee.

Minimum trading days

The fewest days you must place trades on before a phase counts as passed, even if you hit the target sooner.

Time limit

How long you have to hit the profit target. Many firms now have no time limit.

Fee refund

Some firms give your challenge fee back, usually with your first or later payout from the funded account.