▍ REFERENCE

Trading contest & prop firm glossary

30 terms, defined plainly. Every prop firm and broker page on this site links back here, so if you hit a word you don't know, tap it and come back to where you were.

Trailing drawdown: A drawdown limit that moves up with your account's highest balance but never moves down. Apex Trader Funding uses a trailing intraday version — the limit updates tick-by-tick, which is materially stricter than an end-of-day calculation because a temporary unrealized profit you later give back is locked into the new limit.
End-of-day drawdown: A drawdown rule calculated on closing balance each day, not tick-by-tick. Topstep's $2,000 max loss on a 50K combine is end-of-day: you can dip below intraday without violating, as long as you close above the threshold. Gives traders breathing room compared to trailing intraday.
Profit split: The percentage of funded-account profits the trader keeps after a challenge is passed. Ranges from 50% (The5ers High Stakes initial) to 100% on the first slice of profits (Apex first $25K, Topstep first $10K, MFFU first $10K). Most firms scale: starts at 80%, climbs to 90%+ with performance.
Profit target: The percentage gain required to pass an evaluation phase. Typical 2-step: 10% on phase 1, 5% on phase 2 (FTMO). Some firms run 8%/5% (FundedNext Stellar). Topstep uses a days-based mechanic (10 winning days) instead of a percentage.
Evaluation phase: The paid test before funding. 1-step firms pass you in one sitting; 2-step adds a second, lower-target phase (the "verification") designed to weed out one-off lucky runs. Instant-funding skips evaluation entirely for a higher upfront fee and a lower initial split.
10 winning days: Topstep's pass mechanic: accumulate 10 days where you closed with at least a certain minimum profit (typically $200 on a 50K). No profit percentage target — just consistency. Encourages a style of trading that prioritizes steady green days over home-run swings.
Scaling plan: The rules under which a firm increases your funded account size after sustained performance. FTMO scales to $2M, The5ers to $4M, MFFU to $600K, Apex permits multiple concurrent accounts totalling similar ceilings. Always check whether scaling is automatic or discretionary.
Funded account: The live account a prop firm opens for you after passing evaluation. Often still a simulated account whose PnL is mirrored internally by the firm — the firm takes the actual market risk. What matters is that payouts are real money, paid on real cadence (usually bi-weekly or monthly).
Payout: A scheduled withdrawal of your share of funded-account profits. Common cadence: 14 days after first profitable trade, then bi-weekly. FTMO refunds the challenge fee on the first payout — effectively making the evaluation free if you pass.
Consistency rule: A cap on how much of your total profit can come from a single trading day. Typical: your best day cannot exceed 45-50% of total profit across the account. Prevents one-shot gamblers from passing evaluations by sheer luck.
DCA (Dollar-Cost Averaging): Adding to a position at worse prices to lower the average entry. Some firms ban DCA within an existing losing position (Apex historically); others allow it (FTMO, FundedNext). If you trade scaled-in strategies, verify the rule before buying a challenge.
News trading restriction: A window (commonly 2-5 minutes before and after a high-impact news release) during which positions cannot be opened or held. Most prop firms have some form of this rule; Apex relaxed it in 2026 but with strict position-size caps during the window.
Weekend holding: Whether you can hold positions over the Friday close into Monday open. Swing traders require this explicitly. FundedNext allows it, FTMO permits with some instrument restrictions, several futures firms prohibit it entirely.
Overnight holding: Same idea but for intraday-to-next-day. Applies mostly to futures firms. Topstep allows some contracts to be held overnight on funded accounts; most combines prohibit it.
Daily loss limit: Maximum allowed loss in a single trading day, triggering account breach if hit. Common: 5% of starting balance (FTMO, FundedNext). Apex famously has no daily loss limit — just the overall trailing drawdown — which changes the game completely on volatile days.
Max drawdown: The ceiling on total account equity loss across the entire challenge or funded account. Typical: 10% for forex 2-step, 5-8% on stricter programs. Combined with daily loss limits (if any) to form the total risk envelope.
Activation fee: A one-time fee charged after you pass evaluation, before the funded account goes live. Topstep's is $149. Critical to budget upfront — a "cheap" $49/month combine with a $149 activation is functionally a higher all-in cost.
Reset fee: What you pay to retake an evaluation after failing it, without buying a new challenge. Topstep and Apex have reset programs; typically the same price as the monthly fee or a flat discount.
Instant funding: A program type that skips evaluation entirely. You pay a higher upfront fee and immediately trade a live-simulated account. Initial profit splits are lower (70% on FundedNext Stellar Instant 25K) compared to 80-90% for evaluation-passed accounts.
Demo contest: A free competition run on a simulated account. Prize pool is real cash even though trading is paper. InstaForex, XM, RoboForex, OctaFX, and Vantage run the largest demo contest programs. Ranking is usually on profit percentage, scalping ratio, or absolute PnL.
Live contest: A competition run on real live accounts, funded with real money. Bybit Alpha (600K USDT) and Markets4you Monthly are examples. Prizes are usually additional cash or credits on top of any profits the trader generated directly.
Tournament: A bracketed or multi-stage contest format. LiteFinance 20th Anniversary (51 weeks with weekly, monthly, and final prizes), InstaForex Great Race (4 rounds + final), and Phemex Astral League (zodiac seasons) are classic examples.
Prize pool: The total cash awarded across all winning positions in a contest. Can be split across many winners (top 100, 10 finalists, tiered brackets) or concentrated on a handful of top ranks. Always check the breakdown — a "100K USDT" pool with 3 winners is very different from one split across 500 positions.
Entry fee: Cost to register for a contest. Most broker demo contests are free; some live competitions charge small fees or require a minimum deposit to a broker account. Prop firm challenges are never "contests" in this sense — their fee is the evaluation cost.
Account size: The notional capital a funded account is assigned after evaluation. Most firms offer $10K, $25K, $50K, $100K, $200K tiers. Remember: this isn't money you receive — it's the ceiling of your trading, and your split applies only to profits generated on top of it.
Prop firm: A proprietary trading firm that funds retail traders after they pass an evaluation. Modern retail prop firms (FTMO, FundedNext, Apex, Topstep) typically use simulated accounts; classic desk prop uses real market capital. From the trader's side the distinction rarely matters as long as payouts are reliable.
Broker contest: A trading competition organized by a retail broker — usually as marketing to attract new clients. Demo contests are free; live competitions may require opening a real account with the broker.
Worldwide eligibility: Most contests and challenges exclude certain jurisdictions. Common exclusions: US residents (CFTC regulation) for forex demo contests; EU/EEA/UK clients for RoboForex demo contests. Always check the eligibility clause in the TOS, not the marketing page.
KYC (Know Your Customer): The identity verification step required to register for most real-money contests and payouts. Typically involves uploading a government ID and proof of address. Crypto exchange competitions all require KYC; most prop firms require it before first payout.
Simulated vs live account: Modern retail prop firms operate on simulated accounts — your trades don't hit the market; the firm internally mirrors PnL and pays you from house capital. Functionally identical for the trader if payouts are reliable. Live accounts place orders directly on exchanges — rarer in prop, standard in broker competitions.

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We add terms monthly based on what readers and organizers bring up.