Rules First · Lesson 1 of 9 · Free
Know what you’re buying
An evaluation is a product with written terms. Most accounts that fail break a rule the trader never read closely, not because the strategy was bad. Before you buy, you need four answers.
Words in plain English
- Evaluation: the test account you pay for. Hit the profit target without breaking a rule and you pass.
- Drawdown: how much you’re allowed to lose before the account is closed.
- Daily loss limit: the most you can lose in one day.
- Consistency rule: a cap on how much of your total profit can come from one day.
- Payout: money you withdraw from a funded account.
- Stop: the price where you get out of a losing trade.
1. What kind of drawdown is it?
The drawdown is a line under your balance. Touch it and the account is over. There are three types:
- Intraday trailing: the line follows your highest balance including open profit, in real time.
- End-of-day trailing: the line follows your highest closing balance.
- Static: the line never moves.
Example: a $50,000 account with a $2,000 drawdown. The line starts at $48,000. A trade runs to $800 open profit, and you close it for $200.
Under intraday trailing, the $600 you gave back is gone from your room for good, even on a winning trade.
What it looks like on the day it closes you out
Same $50,000 account, $2,000 intraday trailing drawdown. The balance climbs to $51,200, so the line climbs to $49,200. Then the day turns.
The account closes at $49,200: only $800 below where you started, because the line followed your best point up. Try sketching your own last stop-out like this, with your balance, the line and the moment they touched. It makes the rule very hard to forget.
Also ask: does the line ever stop moving up, and where? Many stop once they reach a set level, often your starting balance. Firms call this the drawdown “locking”.
2. Is there a daily loss limit, and is it hard or soft?
- A hard limit ends the account when you hit it.
- A soft limit ends your day but keeps the account.
Both reset each day. The drawdown doesn’t.
3. Is there a consistency rule, and at which stage?
A consistency rule caps how much of your total profit one day can be. Check whether it applies to the evaluation, to payouts, or to both. Also check the wording: “at most 50%” and “below 50%” put the line in different places.
4. What else can hold up a payout?
Minimum trading days, payout caps, banned news windows, minimum trade length. Any of these can sit unnoticed until your first withdrawal.
Your turn
- Open your account’s rules page, or the one you’re about to buy.
- Get the free Prop Firm Rules Checklist (the sign-up box below this lesson) and fill in every line in your firm’s exact words.
- Put your drawdown numbers into the rule decoder and see where your line actually sits today.
Educational material only. Not investment advice. Trading futures involves substantial risk of loss and most people who try it lose money. Check your account rules with your firm; they change.
