Prop trading terms, defined.Prop trading terms, defined.

59 terms

Allocation

The total capital a single trader holds across funded accounts, capped per programme rather than firm-wide. Forex & CFD allows $1,000,000 in funded accounts and $1,000,000 in active assessments; Instant Funding is capped at $190,000; Funded Futures allows four accounts totalling $325,000. Each market's rulebook states its own.

Backtesting

Applying a strategy to historical data to estimate how it would have performed.

Balance

The cash value of the account excluding open positions. Balance only changes when a trade is closed.

Breach

Violating a rule in a way that closes the account — most often exceeding the daily or overall loss limit, but also prohibited practices, which differ by market. Our rule →

Commodity

A physical good traded as a financial instrument — gold (XAUUSD), silver, oil.

Consistency ratio

Best trading day divided by total profit, times 100. It is capped at 25% on Funded Futures and equities, and 33.33% on the 1-Step Futures assessment. The forex & CFD programmes publish no consistency rule. Missing it does not breach the account; it holds up the payout until the ratio comes back inside the cap. Our rule →

Consistency rule

A limit on how much of your total profit may come from a single trading day. FundedRight applies one on Funded Futures, the 1-Step Futures assessment and equities. The forex & CFD programmes do not have one. Our rule →

Contract for differenceCFD

A derivative that settles the price difference of an asset between opening and closing, without owning the asset itself.

Daily cap limit

On crypto accounts, the most the account may move in one day in EITHER direction — 3% of the starting balance, measured against the previous day's equity and reset at 5 PM EST. A day that goes too well locks the account exactly as a day that goes too badly does: positions are closed, pending orders cancelled, and trading is disabled until the next day. Our rule →

DrawdownDD

The fall from an account's peak value to its low point, expressed in currency or as a percentage. Prop firms use it as the primary risk control.

Economic calendar

A schedule of data releases and central bank announcements. It matters at FundedRight because trades may not be opened within five minutes either side of a high-impact event. Our rule →

Equity

Your balance plus the floating profit or loss on any open positions. Because FundedRight's limits are equity based, an unrealised loss can breach a rule before you close the trade.

Evaluation

A test account used to assess a trader before funding. You must reach a profit target without breaching the loss limits. At FundedRight an evaluation has no time limit. Our rule →

Expert AdvisorEA

An automated program that trades on your behalf. FundedRight prohibits automation used to manipulate the system, bypass rules or gain an unfair advantage — including tools marketed as challenge-passing systems. Our rule →

ForexFX

The currency market, traded in pairs. It runs continuously from the Sydney open on Sunday evening to the New York close on Friday.

Front-month contract

The nearest expiring futures contract for a product, which carries the most liquidity and open interest. Futures accounts must trade it — trading an out-month contract is prohibited and can cost the account. Our rule →

Fundamental analysis

Assessing value from economic data, interest rates and central bank policy rather than from the chart itself.

Funded account

The account issued once an evaluation is passed. There is no profit target and no deadline — only the risk limits and the trading rules continue to apply.

Hard breach

A rule violation that ends the account. Exceeding the maximum drawdown is a hard breach on every market we offer, and on a funded account any accumulated gains are forfeited unless a payout-protection add-on was bought at purchase. Our rule →

Hedging

Holding opposing positions to offset exposure. Prohibited at FundedRight where used across related accounts to neutralise risk or game the evaluation. Our rule →

Index

A basket of shares quoted as a single instrument, such as US30 or NAS100, traded as a CFD rather than by owning the constituents.

Instant funding

A funded account issued without an evaluation. FundedRight offers two — Instant Pro and Instant Lite — and on both the drawdown trails your closed balance before locking permanently at your starting balance, including the moment you request a payout. Our rule →

Intraday equity high-water markHWM

The highest equity an account has touched during a session, used to trail a drawdown. It matters because a spike during the day moves the breach level up permanently, even if the account closes far below that spike. The 1-Step Futures assessment trails this way; Funded Futures trails on end-of-day balance instead, which is far more forgiving. Our rule →

Leverage

The multiple of your capital you may control. On the forex & CFD programmes it is 1:50, meaning $1,000 of margin controls $50,000 of position — and it is set per asset class, so indices are 10:1, oil 5:1 and crypto 2:1. Higher leverage magnifies losses exactly as much as gains.

Limit order

An instruction to trade only at a specified price or better. It may never fill if the market does not reach your level.

Liquidity

How easily an instrument can be traded without moving its price. Thin liquidity widens spreads and increases slippage.

Lot

The standard unit of trade size. In forex a standard lot is 100,000 units of the base currency; a mini lot is 10,000 and a micro lot 1,000.

Major pairs

The most heavily traded currency pairs, all involving the US dollar — EURUSD, GBPUSD, USDJPY, USDCHF among them. They usually carry the tightest spreads.

Margin

The capital set aside to hold an open position. If equity falls too close to the margin requirement, positions may be closed automatically.

Margin call

A warning that equity has fallen near the minimum required to keep positions open. If it continues to fall, a stop-out follows.

Market order

An instruction to buy or sell immediately at the best price available.

Maximum daily loss

The most an account may lose in a single trading day before it is failed. Measured on equity, so open positions count towards it — not just closed trades. Our rule →

Maximum overall loss

The total drawdown an account may sustain across its lifetime. Reaching or passing the threshold at any moment, including on floating losses, fails the account. Our rule →

Minimum trading days

The smallest number of days on which you must place at least one trade before an evaluation phase can be completed or a payout requested. Equities requires three days that each make at least 0.50%. The forex & CFD and 1-Step Futures programmes publish no minimum. Our rule →

Notional funding

When the capital shown on a funded account differs from the money actually on deposit with the liquidity provider. The nominal size sets your trading conditions and your targets; it does not represent cash held on your behalf. It does not change how your gain or loss is calculated.

One-Step challenge

A single-phase evaluation. You reach the funded stage faster, in exchange for a tighter overall loss limit and a higher target to clear in one go. Our rule →

Payout

A withdrawal of your share of realised profit. On forex & CFD your first payout can be requested at any time and each one after that once every 30 days. Crypto works the same way; equities pays every 14 days; Funded Futures pays fixed cash at the end of each phase. Our rule →

Pip

The smallest conventional price increment for a currency pair — the fourth decimal place on most pairs, the second on yen pairs.

Position sizing

Choosing lot size so that a losing trade costs a planned fraction of the account. It is the main practical defence against a daily-loss breach.

Profit buffer

An amount of profit that must stay in a funded account and cannot be withdrawn. It is not a fee and is not deducted — only profit above it is withdrawable, and the profit split applies to what is left after it is set aside. Used on the 1-Step Futures assessment. Our rule →

Profit split

The share of profit the trader keeps. FundedRight pays 80/20 in the trader's favour on every CFD evaluation and 90/10 on crypto and Funded Futures. On all of them the split is fixed — it does not improve or worsen as the account grows. Our rule →

Proprietary trading firmProp firm

A firm that puts its own capital behind traders rather than managing money for outside clients. You trade the firm's account under a defined rulebook and keep an agreed share of the profit.

Risk-reward ratioR:R

The size of the intended profit relative to the amount risked. Risking $100 to make $300 is a 1:3 ratio.

Scaling

Increasing a trader's account size after sustained profitability, usually against published milestones rather than at the firm's discretion.

Slippage

The difference between the price you expected and the price you received. It widens around high-impact news, which is one reason news trading is restricted.

Soft breach

A limit that stops the day rather than ending the account. The equities daily profit cap is one: hit it during the evaluation and trading halts, but the account survives. Contrast with a hard breach. Our rule →

Spread

The gap between the bid and ask price. It is an immediate cost on every position, which is why a trade opens slightly negative.

Static drawdown

A loss limit calculated once from the starting balance that never moves, no matter how much profit you make. On a $10,000 account with a 10% limit, the floor is always $9,000. FundedRight uses static drawdown on Two-Step and One-Step. Our rule →

Stop lossSL

A resting order that closes a position once it moves against you by a set amount, capping the loss on that trade.

Stop-out

Automatic closure of open positions by the platform when equity can no longer support the margin requirement.

Support and resistance

Price levels where buying or selling has previously been strong enough to halt a move, often used to place entries and stops.

Swap

The financing charge or credit applied for holding a position overnight, reflecting the interest-rate difference between the two currencies.

Take profitTP

A resting order that closes a position once a target profit is reached.

Technical analysis

Reading price and volume history to anticipate future movement, using structures such as support, resistance and trend.

Trading journal

A record of every trade with the reasoning behind it. The most reliable way to find out whether losses come from the strategy or from breaking it.

Trading session

The active hours of a regional market — Sydney, Tokyo, London and New York. Liquidity and volatility peak where sessions overlap.

Trailing drawdown

A loss limit that rises as your equity grows. FundedRight's version stops trailing once it reaches your starting balance, so your initial capital becomes fully protected and the floor never rises above it. Our rule →

Two-Step challenge

An evaluation split across two phases, typically a higher target in phase one and a lower one in phase two. At FundedRight the trade-off for the extra phase is the widest static drawdown of the three routes, and the lowest fee. Our rule →

Volatility

The size and speed of price movement. High volatility raises both opportunity and the chance of hitting a daily loss limit.