Short, plain-English definitions of the terms you’ll meet in prop firm rules and forex trading, each linked to a tool or guide that goes deeper.
Drawdown · Static drawdown · Trailing drawdown · End-of-day (EOD) drawdown · Daily loss limit · Consistency rule · Profit split · Payout buffer · Pip · Lot size · Risk/reward ratio · Expectancy
Drawdown
The fall in account value from a peak. Prop firms set a maximum drawdown that fails the account if breached. Drawdown recovery calculator →
Static drawdown
A loss limit measured from the starting balance that never moves. On a $100K account with a 10% static limit, the floor stays at $90,000. Prop firms with static limits →
Trailing drawdown
A loss limit that rises with your highest balance or equity, so profits you give back count against you. Common at futures firms. EOD vs intraday drawdown →
End-of-day (EOD) drawdown
A trailing limit that updates only from your closing balance, so open profit during the session does not raise the floor. Firms with EOD drawdown →
Daily loss limit
The most you can lose in one trading day. Depending on the firm it fails the account or pauses trading until the next session. Firms with no daily limit →
Consistency rule
A cap on how much of your total profit can come from a single day, for example 40% or 50%. Latest rule changes →
Profit split
The share of profits paid to you on a funded account, typically 80% to 100%. Payouts compared →
Payout buffer
A minimum profit you must build above the starting balance before withdrawing, used by firms such as Take Profit Trader. Take Profit Trader review →
Pip
The standard unit of price movement in forex: 0.0001 for most pairs and 0.01 for yen pairs. One pip on a standard lot of EUR/USD is worth $10. Pip value calculator →
Lot size
The size of a forex position. A standard lot is 100,000 units, a mini lot 10,000 and a micro lot 1,000. Position size calculator →
Risk/reward ratio
The potential profit of a trade divided by its potential loss. A 2:1 trade targets twice the amount it risks. Risk/reward calculator →
Expectancy
The average amount a strategy makes or loses per trade, based on win rate and average win and loss. Expectancy calculator →
Glossary FAQ
What is the difference between static and trailing drawdown?
What does EOD drawdown mean?
Risk warning: Trading forex, futures, CFDs and other leveraged products involves a high risk of loss and is not suitable for every investor. Nothing on this site is investment advice.