Prop firm challenge terms
Plain definitions for the language used across this guide. Where a term has a check behind it, the entry points to the page that develops it.
The terms, defined
Funded-account evaluation
A paid test set by a prop firm in which a trader must hit a profit target without breaching a drawdown rule; passing earns access to a funded account.
Maximum drawdown
The largest peak-to-trough loss an evaluation permits before the challenge ends - the rule that matters more than the profit target. See: respect the drawdown first.
Daily loss limit
A cap on how much can be lost in a single day; breaching it ends the challenge even if the overall drawdown is intact.
Consistency rule
A requirement that profit be spread across days or trades rather than coming from one outsized win, so the result reflects a repeatable process.
Position sizing
Deciding how much to risk on a trade so that a normal losing run cannot breach the drawdown rule; the lever that decides whether a strategy survives an evaluation.
Pre-committed stop
A stop level fixed before the trade is entered and not widened afterward; the single habit a drawdown rule rewards most. See: pre-committed risk.
Cryptographic timestamp
A hash of a call written to a public ledger when it is sent, proving the call - entry, target, stop and grade - existed in that exact form at that moment and was not altered afterward. See: verify a record yourself.
Conviction grade
An A-to-D mark for how strong a call is against its own model's measured spread of returns; the E grade does not exist. See: measured conviction grades.
Win rate
The share of calls that closed profitably - meaningful only with the total signal count shown beside it. See: a counted record.
Mean reversion
Trading on a price that has stretched unusually far from a typical level and tends to snap back toward it; the logic the four models share across their clocks.