Prop trading glossary
The vocabulary of funded futures trading, in plain words — 18 terms that decide whether an account survives, explained without jargon. If you only read one, read trailing drawdown: it's the rule that catches most people out.
- Drawdown cushion
- How much you can lose before the firm closes this account. It's the single most important number on the page — when it hits zero, the account is gone.
- Trailing drawdown
- Your cut-off point rises every time your balance hits a new high, but never falls back down. So a good day permanently raises the floor you have to stay above.
- Static drawdown
- Your cut-off point is a fixed balance set when the account started. It doesn't move, whatever you make.
- Daily loss limit
- The most you're allowed to lose in one day. Go past it and at most firms the account is finished that same day — it isn't a warning.
- Consistency rule
- A cap on how much of your total profit is allowed to come from one big day. It stops a single lucky day passing an evaluation.
- Your average losing day
- On the days you finish down, this is what you typically lose. We use it to turn dollars into something you can feel — how many bad days you could take.
- Two rough weeks
- You trade on a one-to-two week horizon. This is how many losing days two weeks usually holds for you — the bar an account should clear. A full month of bad days is longer than this book is meant to survive.
- How the simulation works
- We replay the next 30 days two thousand times, each time dealing your wins and losses in a different random order. Same habits, different luck.
- Survival rate
- Out of those two thousand imagined months, how often the account was still alive at the end.
- The shaded band
- Eight out of ten imagined months finished somewhere inside this band. The line through the middle is the typical one — half did better, half did worse.
- Expectancy
- What one average trade is worth once wins and losses are weighed together. If it's negative, trading more just loses money faster.
- Points
- The change in your odds, measured in percentage points. Going from a 40% to a 55% chance is a 15 point improvement.
- Within noise
- The difference is too small to trust. Re-run the simulation and it could easily flip the other way, so we won't claim it helps.
- High-water mark
- The highest balance this account has ever reached. Trailing drawdown measures down from this point, not from where you started.
- Qualifying day
- A day that counts towards the minimum number of trading days a firm requires before it will pay you.
- A stop, in points
- How far you let one trade go against you. Dollars at risk = points × the contract's listed value per point × your contracts. These are scenarios you pick — TiltOwl has no live market feed.
- Smart size
- The most contracts where one full stop-out still costs at most half your remaining drawdown — and half the daily limit if there is one. The other half stays for the next loss.
- Absolute max
- The size where one stop-out spends the entire budget — drawdown, daily limit, or firm cap, whichever is smallest. Trading here means a single loss ends the account or the day.
See these rules against real firms
Every term here is a column in the firm comparison, or you can read the full rules per firm.