Prop trading glossary

Thirty terms that decide whether a strategy survives a funded account — each defined in one sentence, then explained in two minutes. Grouped by where they bite: the drawdown model, the evaluation rules, the account lifecycle, the payout mechanics, and the technical terms that separate a real backtest from a flattering one.

Drawdown

• Trailing drawdown — A trailing drawdown is a loss limit whose floor moves up as the account makes new highs, so the distance you c…
• EOD trailing drawdown — End-of-day trailing drawdown is a trailing loss limit whose floor updates only once per day, at the session cl…
• Intraday trailing drawdown — Intraday trailing drawdown is a trailing loss limit whose floor follows the account's highest equity touched a…
• Static drawdown — A static drawdown is a fixed loss floor set at account opening that never moves, regardless of how much profit…
• Daily loss limit — A daily loss limit (DLL) caps how much an account can lose in a single trading session, separately from the ov…
• Buffer — The buffer is the distance between the current account balance and the drawdown floor — the amount the a…
• Drawdown floor — The drawdown floor is the account balance at which the account is closed for breaching its loss limit.…
• Maximum adverse excursion (MAE) — Maximum adverse excursion is the worst unrealised loss a trade reaches before it closes, whether it ends profi…

Evaluation rules

• Consistency rule — A consistency rule caps how much of an account's total profit may come from a single trading day, expressed as…
• MLL (Maximum Loss Limit) — Topstep’s name for its end-of-day trailing drawdown: trails the highest closing balance and locks at the starting balance.
• Minimum trading days — A minimum trading days rule requires the account to be traded on at least a set number of separate days &mdash…
• Winning day — A winning day is a trading day that closes with net profit above a firm-defined threshold, and it is the unit …
• Profit target — The profit target is the account gain required to pass an evaluation, usually expressed in dollars and typical…
• Scaling plan — A scaling plan is a firm rule that restricts how many contracts a funded account may trade until the balance r…
• Maximum contracts — A maximum contract limit is the largest number of contracts an account may hold open simultaneously, usually s…
• News trading rule — A news trading rule restricts opening or holding positions around scheduled high-impact economic releases, usu…
• Inactivity rule — An inactivity rule closes an account after a run of consecutive days — commonly thirty — without a…

Account lifecycle

• Evaluation — An evaluation is the paid test account a trader must pass — reaching a profit target without breaching t…
• Funded account — A funded account is the post-evaluation account on which a trader's profits become withdrawable, subject to a …
• Simulated funded account — A simulated funded account is a funded-stage account that trades in a simulated environment while the firm mir…
• Performance account — A performance account (PA) is Apex Trader Funding's term for its funded-stage account, the stage at which payo…
• Reset — A reset restores a failed or drawn-down evaluation account to its starting balance and drawdown floor for a fe…
• Breach — A breach is a violation of an account rule — most often crossing the drawdown floor or the daily loss li…

Payouts

• Payout — A payout is the withdrawal of a trader's share of profit from a funded account, subject to eligibility rules a…
• Profit split — The profit split is the share of funded-account profit the trader keeps, commonly 90/10 in the trader's favour…
• Payout buffer — A payout buffer is an amount of profit a funded account must hold above the starting balance before a withdraw…
• Safety net — A safety net is a balance threshold a funded account must reach and maintain before payouts become available, …

Technical

• Repainting — Repainting is when a script's historical signals change after the fact, so the chart shows signals that were n…
• barstate.isconfirmed — barstate.isconfirmed is a Pine Script built-in that is true on all historical bars and on the closing update o…
• Lookahead bias — Lookahead bias is the use of information in a backtest that was not available at the moment the trade would ha…
• Slippage — Slippage is the difference between the price a strategy assumes and the price it actually receives, and it is …

Every entry links to the full guide on that topic. Terms not listed here are covered in the blog and in the rules guides linked from each entry.