Prop Firm Glossary — Every Term You Need

Plain-English definitions of the terms used across prop firm evaluations: drawdown, profit split, consistency rule, activation fee, scaling plan, and more.

Reviewed by the Fundify Editorial Team · Methodology · Editorial policy · Last updated May 21, 2026

Proprietary trading firms ("prop firms") use a recognisable vocabulary across evaluations, funded accounts, payouts and rules. Most of it is shared between firms; the differences usually live in the specific numbers a firm picks for each. This glossary defines every term that appears on Fundify's firm pages and across our other guides.

Each entry is a single-sentence factual definition. For how the term affects a real account at a real firm, follow the link from any firm page on Fundify.

Glossary

Evaluation: A paid test that traders must pass to get a funded account. Common formats are one-step (single profit target) and two-step (a profit target followed by a verification phase). Often called a "challenge."
Instant funding: A funded account purchased directly — no evaluation phase. The trader pays more upfront and starts in the funded environment immediately, usually with stricter rules.
Profit target: The percentage of the account size a trader must gain in an evaluation phase to advance (commonly 8–10% for two-step, 6–10% for one-step).
Drawdown: The maximum loss allowed before a trader fails the account. Measured from a reference point that depends on the drawdown type (static, trailing, end-of-day, or balance-based).
Static drawdown: A drawdown limit fixed at a single dollar value for the life of the account; the trader knows the floor on day one and it never moves.
Trailing drawdown (EOD): A drawdown limit that tracks the account's highest end-of-day balance. As the closing balance rises, the floor rises with it; intraday peaks do not move the floor.
Trailing drawdown (intraday): A drawdown limit that tracks the highest unrealised balance reached at any moment, including intraday. The floor can move on you while a trade is open — the strictest variant.
Balance-based drawdown: A drawdown limit that tracks the running account balance rather than equity — open trades do not move the floor until they are closed.
Profit split: The percentage of profits paid to the trader vs. retained by the firm (e.g. "80% profit split" = trader keeps 80%, firm keeps 20%). Many firms pay 100% on the first withdrawal as a sign-up incentive.
Consistency rule: A constraint that caps how much of a trader's total profit can come from a single day or trade (commonly 30–40%). Designed to discourage all-or-nothing trades; varies widely between firms.
Activation fee: A one-time fee paid when transitioning from a passed evaluation to the funded account. Sometimes called a "transition fee." Materially affects the all-in cost of getting funded.
Scaling plan: A schedule under which a trader can grow their funded account size after hitting profit milestones (e.g. +25% account size every 30 trading days at 10% profit).
Reset: Paying a fee to restart a failed evaluation phase without buying a brand-new account. Usually cheaper than buying a new evaluation.
First payout: The minimum waiting period between funding and a trader's first allowed withdrawal — anywhere from same-day to 30+ days. A key payout-reliability signal.
Payout frequency: How often a funded trader may request a withdrawal once eligible — daily, weekly, bi-weekly or monthly.
Daily loss limit: A cap on losses within a single trading day, separate from the overall drawdown. Hitting it usually ends the day; some firms also count it as a failure.
Maximum allocation: The largest funded account size a trader can hold at one firm, either as a single account or summed across multiple accounts after scaling.
Phases: The number of evaluation stages a trader must complete before being funded — 1-step, 2-step, or "instant" (zero).
EA / bots / copy trading: Allowances for automated trading, expert advisors and copy-trading respectively. Firms vary widely; restrictions usually live in the firm's rules page.
KYC: Know-Your-Customer identity verification. Required at most firms before a first withdrawal; the trigger and document set vary.
Fundify Score: Fundify's independent 0–100 rating of a prop firm, computed from 10 weighted pillars (cost, payout reliability, drawdown fairness, rules, trust, etc.). Methodology is published in full.

More guides: Prop Firm Drawdown Explained — Static vs. Trailing vs. EOD · Evaluation vs. Instant Funding — Which Model Suits You · How to Choose a Prop Firm — A Five-Question Decision Framework

Prop Firm Glossary — Every Term You Need

Plain-English definitions of the terms used across prop firm evaluations: drawdown, profit split, consistency rule, activation fee, scaling plan, and more.

Reviewed by the Fundify Editorial Team · Methodology · Editorial policy · Last updated May 21, 2026

Each entry is a single-sentence factual definition. For how the term affects a real account at a real firm, follow the link from any firm page on Fundify.

Glossary

Evaluation: A paid test that traders must pass to get a funded account. Common formats are one-step (single profit target) and two-step (a profit target followed by a verification phase). Often called a "challenge."
Instant funding: A funded account purchased directly — no evaluation phase. The trader pays more upfront and starts in the funded environment immediately, usually with stricter rules.
Profit target: The percentage of the account size a trader must gain in an evaluation phase to advance (commonly 8–10% for two-step, 6–10% for one-step).
Drawdown: The maximum loss allowed before a trader fails the account. Measured from a reference point that depends on the drawdown type (static, trailing, end-of-day, or balance-based).
Static drawdown: A drawdown limit fixed at a single dollar value for the life of the account; the trader knows the floor on day one and it never moves.
Trailing drawdown (EOD): A drawdown limit that tracks the account's highest end-of-day balance. As the closing balance rises, the floor rises with it; intraday peaks do not move the floor.
Trailing drawdown (intraday): A drawdown limit that tracks the highest unrealised balance reached at any moment, including intraday. The floor can move on you while a trade is open — the strictest variant.
Balance-based drawdown: A drawdown limit that tracks the running account balance rather than equity — open trades do not move the floor until they are closed.
Profit split: The percentage of profits paid to the trader vs. retained by the firm (e.g. "80% profit split" = trader keeps 80%, firm keeps 20%). Many firms pay 100% on the first withdrawal as a sign-up incentive.
Consistency rule: A constraint that caps how much of a trader's total profit can come from a single day or trade (commonly 30–40%). Designed to discourage all-or-nothing trades; varies widely between firms.
Activation fee: A one-time fee paid when transitioning from a passed evaluation to the funded account. Sometimes called a "transition fee." Materially affects the all-in cost of getting funded.
Scaling plan: A schedule under which a trader can grow their funded account size after hitting profit milestones (e.g. +25% account size every 30 trading days at 10% profit).
Reset: Paying a fee to restart a failed evaluation phase without buying a brand-new account. Usually cheaper than buying a new evaluation.
First payout: The minimum waiting period between funding and a trader's first allowed withdrawal — anywhere from same-day to 30+ days. A key payout-reliability signal.
Payout frequency: How often a funded trader may request a withdrawal once eligible — daily, weekly, bi-weekly or monthly.
Daily loss limit: A cap on losses within a single trading day, separate from the overall drawdown. Hitting it usually ends the day; some firms also count it as a failure.
Maximum allocation: The largest funded account size a trader can hold at one firm, either as a single account or summed across multiple accounts after scaling.
Phases: The number of evaluation stages a trader must complete before being funded — 1-step, 2-step, or "instant" (zero).
EA / bots / copy trading: Allowances for automated trading, expert advisors and copy-trading respectively. Firms vary widely; restrictions usually live in the firm's rules page.
KYC: Know-Your-Customer identity verification. Required at most firms before a first withdrawal; the trigger and document set vary.
Fundify Score: Fundify's independent 0–100 rating of a prop firm, computed from 10 weighted pillars (cost, payout reliability, drawdown fairness, rules, trust, etc.). Methodology is published in full.