45 terms covering futures trading mechanics, prop-firm evaluation rules, and risk management — plain-language definitions, no jargon left unexplained.
Evaluation Rules
Consistency Rule
A rule capping the percentage of total profit that can come from a single best trading day (commonly 40-55%), designed to prevent traders from passing an evaluation on one lucky session.
Minimum Trading Days
The fewest number of distinct trading days a trader must be active before they are eligible to pass an evaluation or request a payout, meant to discourage single-session luck-based passes.
One-Step Evaluation
A prop-firm assessment structure requiring a trader to pass just a single profit-target phase before becoming funded, as opposed to multi-phase evaluations.
Profit Target
The dollar amount of profit a trader must reach during a prop-firm evaluation (or combine) to qualify for a funded account. Typically expressed as a fixed dollar figure or percentage of starting balance (e.g., 6% on many futures firms).
Two-Step Evaluation
A prop-firm assessment structure requiring traders to pass two sequential phases (often a larger initial target followed by a smaller verification target) before receiving a funded account.
Risk Rules
Daily Loss Limit
A cap on how much an account is allowed to lose within a single trading day. Breaching it typically halts trading for the day (or, in some firms, breaches the entire account) but resets each new session.
End-of-Day (EOD) Trailing Drawdown
A trailing drawdown variant that recalculates and locks the drawdown floor only once per day, at the market close, based on the account's closing balance rather than intraday unrealized P&L.
High-Water Mark (HWM)
The highest equity value an account has reached; trailing drawdown thresholds are calculated as a fixed distance below this peak.
Intraday Trailing Drawdown
A trailing drawdown variant that tracks a trader's real-time equity (including open, unrealized P&L) throughout the session, meaning the drawdown floor can rise and the account can breach at any moment during live trading.
Liquidation
The forced closing of open positions, either by an exchange/broker due to insufficient margin or by a prop firm's risk engine after a drawdown breach.
Maximum Drawdown
The largest allowable decline in account equity from its peak before an account is breached and closed. Firms set this as a fixed dollar amount tied to the account size.
Static Drawdown
A fixed maximum-loss threshold set at account opening that never moves, regardless of subsequent profits. Considered more forgiving than trailing models since locked-in gains cannot raise the floor to trap a trader.
Trailing Drawdown
A drawdown limit that rises along with a trader's account equity as new highs are made, but never moves back down when equity falls. Once the floor is set by a peak, only new peaks raise it further.
Prop Firm Structure
Account Reset
The option to restart a failed or breached evaluation account, usually for a discounted fee, without needing to purchase an entirely new evaluation.
Evaluation (Combine)
The paid assessment phase in which a trader must hit a profit target while respecting drawdown and risk rules to prove they can trade the firm's capital before being funded.
Funded Account
A simulated or live trading account provided by a prop firm after a trader passes an evaluation, allowing the trader to earn a share of profits generated against the firm's capital.
Prop Firm (Proprietary Trading Firm)
A company that provides traders access to trading capital (often simulated) in exchange for an evaluation fee and a share of the profits generated, rather than requiring traders to risk their own funds.
Scaling Plan
A program that increases a funded trader's account size and/or contract allowance over time as they hit consistent profit milestones, without requiring a new evaluation purchase.
Sim-Funded Account
A funded account that trades on a simulated (paper) platform connected to live market data, rather than real exchange capital, while still paying traders real profit-split payouts — the dominant model among modern futures prop firms.
Payouts
Payout
A withdrawal of a funded trader's earned profit share, subject to firm-specific rules like minimum profit buffers, request windows, and payout frequency limits.
Profit Split
The percentage of profits a funded trader keeps versus what the prop firm retains, commonly ranging from 80% to 100% (often with a higher split, e.g., 100%, on an initial profit tranche before dropping to 90%).
Futures Basics
Contract Expiration
The date on which a futures contract stops trading and is settled, either by cash settlement or physical delivery, depending on the product.
Contract Specifications
The exchange-defined details of a futures contract, including tick size, contract size, trading hours, and settlement terms, that traders must know before trading a product.
E-mini Contract
An electronically traded futures contract representing a fraction of the value of a standard full-sized futures contract (e.g., the E-mini S&P 500, ticker ES), popular for its liquidity and lower capital requirement.
Futures Contract
A standardized, exchange-traded agreement to buy or sell an underlying asset at a predetermined price on a specified future date.
Initial Margin
The amount of capital required to open a new futures position, set by the exchange and often marked up by brokers or prop firms for risk control.
Leverage
The ability to control a large notional contract value with a comparatively small amount of margin capital, magnifying both potential gains and losses.
Maintenance Margin
The minimum equity that must be maintained in an account to keep an existing futures position open; falling below it triggers a margin call or forced liquidation.
Margin
The good-faith deposit required to open and hold a futures position, representing a fraction of the contract's full notional value rather than full payment.
Micro E-mini Contract
A smaller-sized version of a standard E-mini futures contract (typically 1/10th the notional value), letting traders take positions with lower margin and dollar risk per tick.
Open Interest
The total number of outstanding futures contracts that have not yet been closed, delivered, or expired, used as a gauge of market liquidity and participation.
Point Value
The dollar value of a one full point move in a futures contract's price, used to calculate profit or loss for a given price change (e.g., $50 per point on the E-mini S&P 500).
Rollover
The process of closing a position in an expiring futures contract and opening an equivalent position in the next active contract month to maintain market exposure.
Tick Size
The smallest allowable price movement (increment) for a given futures contract, as set by the exchange.
Tick Value
The dollar amount gained or lost per minimum price increment (tick) on one contract; varies by product (e.g., $12.50 per tick on the E-mini S&P 500).
Trading Practices
Day Trading
A trading style in which all positions are opened and closed within the same trading session, avoiding overnight exposure and margin requirements.
News Trading Restriction (Blackout Window)
A rule some prop firms impose that prohibits opening or holding positions for a set window (e.g., 2-5 minutes) around major scheduled economic news releases, due to volatility and slippage risk.
Overnight Position
A futures position held open past the regular session close into the next trading day, which many prop firms restrict or disallow during evaluations due to added risk (gap risk).
Swing Trading
A trading style that holds positions for multiple days to weeks to capture larger directional price moves, often restricted or limited by prop firms' overnight rules.
Trading Mechanics
Bracket Order
An order type that simultaneously places an entry order along with attached take-profit and stop-loss orders, commonly required or encouraged by prop firms for disciplined risk control.
Limit Order
An order to buy or sell a futures contract at a specified price or better, guaranteeing price but not guaranteeing the order will fill.
Market Order
An order to buy or sell immediately at the best currently available price, guaranteeing execution but not the fill price.
Slippage
The difference between a trade's expected execution price and its actual fill price, typically caused by fast-moving markets or low liquidity.
Stop-Loss Order
An order that automatically closes a position once price reaches a specified adverse level, used to cap losses and satisfy prop-firm risk-management requirements.
Costs & Fees
Round-Turn Commission
The total brokerage/platform fee charged for both opening and closing a single futures contract position, usually quoted as one combined per-contract fee.