Glossary: Terms That Carry a Firm-Specific Definition

Several terms in this industry have no standard definition. “Maximum loss”, “daily loss”, “profit split” and “funded account” mean materially different things at different firms, and the difference is usually in the terms rather than in the marketing. This page gives the general meaning and marks where you must check the specific firm’s wording.

⚠️ = the definition varies enough between firms that the general meaning is not usable on its own.

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Balance. Closed, realised account value. Open positions do not count towards it.

Consistency rule ⚠️. A cap on how much of your total profit may come from one day or one position. Firms apply it at different stages — during the evaluation, on the funded account, or only when a payout is requested — at values that typically run 15–50%. Most apply it as a general rule; at least one applies it selectively, as a sanction.

Daily loss limit ⚠️. A second floor beneath the maximum loss, reset once a day. The percentage varies less than the base it is measured from, which may be: the initial balance; the balance at a fixed daily anchor; the greater of opening balance or opening equity; or the greater of the previous day’s closing equity or balance. Reset times observed across firms include 00:00 CE(S)T, 00:00 UTC, 00:00 UTC+3, 00:30 UTC and 17:00 EST.

Equity. Balance plus open profit and loss, adjusted for swaps and commissions. Most drawdown limits are measured against equity, which is why a position you have not closed can breach one. See trailing vs static drawdown.

Evaluation / challenge. The paid assessment stage. One, two or three phases, depending on the product.

Funded account ⚠️. The stage after passing. In most of the industry this is a simulated account, not an account holding real capital. Firms’ own terms are generally explicit about it — one states that funds are “fictitious, do not represent any currency”; another that “all trading is simulated only”. The word describes the profit-share entitlement, not the presence of client capital.

High-water mark. The highest equity or balance the account has reached. Trailing drawdown floors are calculated from it.

Instant funding. A product sold without an evaluation phase. It usually carries a trailing drawdown and a lower initial split.

Maximum loss / maximum drawdown ⚠️. The floor below which the account fails. Static = fixed at the initial balance and never moves. Trailing = moves upward behind a peak. Which peak, whether a breach is evaluated in real time or at a daily reset, and where the floor finally locks all vary per firm and per product — including between two products at the same firm.

Payout / reward ⚠️. The payment of profit share. Firms generally write “reward” rather than “profit” or “withdrawal”, because the payment is contractual compensation under a service agreement rather than a withdrawal of a client balance. The distinction is legal, not cosmetic.

Payout cadence. How often a payout may be requested: daily, every 48 hours, weekly, bi-weekly, monthly, or on demand. At some firms the profit split is a function of the cadence chosen.

Profit split ⚠️. The share of profit paid to the trader. The advertised figure is frequently conditional — on cadence, on a paid add-on, on account size, or on months of scaling. See what “up to 100% profit split” means.

Profit target. The gain required to pass a phase, as a percentage of the starting balance.

Reset. Repurchasing a failed evaluation at a discount. Discounts range from a few per cent to around 30–70% of the original fee. Some firms sell no reset at all.

Scaling. An increase in account size after sustained performance. Conditions typically combine elapsed time, cumulative profit and a number of processed payouts.

Simulated / demo. No real orders reach a market and no settlement occurs. This is the condition on which the product sits outside investment-services regulation in the one jurisdiction that has published a developed position. See are prop firms regulated.

Trade idea ⚠️. The unit used in per-trade risk caps. The definition matters more than the percentage: at least one firm’s definition aggregates split positions, and any new position in the same direction opened within ten minutes of closing a losing one, so re-entries count as one idea.

Unrealised P&L. Profit or loss on open positions. Counted toward the loss limit at most firms. The most common reason a breach arrives as a surprise.

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Written by the upme.com research desk. Definitions marked ⚠️ should always be checked against the specific firm’s published terms. Corrections to the address on our sourcing page. Nothing here is investment advice.

Sources

Every factual claim above is drawn from one of the documents below. Where a document has been superseded since the date given, tell us and the piece is corrected with a dated line.

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