Prop Firm Rules Glossary: Every Common Rule Explained

Hard rules and soft rules

It helps to sort prop rules into two groups. Hard rules, such as the daily loss limit and maximum loss, end the account immediately when breached. Soft rules, such as a consistency rule or minimum trading days, usually do not end the account but stop you passing a phase or receiving a payout until you meet them.

Some firms also have prohibited practices, for example exploiting price feed errors or coordinating trades between accounts. These are treated seriously and can lead to account closure and forfeited profits even after the fact. Drawdown rules are covered in depth in our drawdown guide, so this glossary focuses on everything else.

Targets, time and activity

• Profit target — The gain you must reach to pass an evaluation phase, expressed as a percentage of the starting balance.
• Time limit — A maximum number of days to reach the target. Many programs now have no time limit, while others offer one as a cheaper option.
• Minimum trading days — The fewest separate days on which you must place a trade before you can pass a phase or request a payout. Common minimums range from none to a handful of days.
• Trading day definition — What counts as a day. Some firms require a trade to be opened that day; others count any day with an open position or a minimum profit.
• Inactivity rule — An account can be closed if no trade is placed for a set period, commonly around 30 days. Set a reminder if you take a break.

Consistency rules

• Consistency rule — Limits how much of your total profit can come from a single day or trade. A common form says no single day may account for more than a set share, such as 30% to 50%, of total profit in the phase or payout period.
• Lot size consistency — Requires your position sizes to stay within a range of your average, to stop traders passing with one oversized trade.
• How it is enforced — Usually at the end of a phase or when you request a payout. Breaching it rarely closes the account; more often you must keep trading until the ratio is met.

News, weekends and overnight holding

• News trading restriction — Bans opening or closing trades within a window around high-impact economic releases, commonly a few minutes before and after. Some firms only apply it to funded accounts; others allow news trading entirely.
• Profit from restricted news trades — Rather than breaching the account, some firms simply remove profits made inside the news window from your payout.
• Overnight holding — Most forex and CFD programs allow positions to be held overnight. Some intraday-only programs require all trades to be closed before the daily cut-off.
• Weekend holding — Holding positions over the weekend may be banned or allowed only on certain programs, because markets can gap at the open. Crypto weekend rules are often separate.
• Trading hours — Some instruments, such as stocks and indices, can only be traded while their exchange is open, regardless of firm rules.

Automation, copy trading and hedging

• Expert advisors (EAs) and bots — Automated strategies are allowed at many firms, sometimes only with approval. High-frequency strategies and off-the-shelf EAs used by many traders are commonly banned.
• Trade copiers — Copying trades between your own accounts at the same firm is often allowed within limits. Copying across firms or from signal services may be restricted.
• Copy trading and group trading — Trading the same signals as other traders, or managing accounts for someone else, is commonly prohibited because it multiplies the firm's risk.
• Account management — Letting another person trade your account is almost always banned, and can void all profits.
• Hedging — Holding opposite positions in the same instrument. Usually allowed within one account, but hedging across two accounts or two firms is a common prohibited practice.
• Martingale and grid strategies — Adding to losing positions with increasing size. Often allowed in principle but limited in practice by exposure rules and daily loss limits.

Platform matters for automation too. See our guide to prop firm trading platforms for what each platform supports.

Position size and exposure

• Maximum lot size or contract limit — Caps the size of a single position or the total open size. Futures programs usually limit contracts rather than lots.
• Leverage — The ratio of position value to account balance. Prop leverage is often lower on indices, metals, crypto and stocks than on major currency pairs.
• Exposure limit — Caps how much risk you can have open at once, sometimes expressed as a maximum percentage at risk per trade.
• Stop-loss requirement — Some programs require every trade to have a stop loss, or limit risk per trade to a set percentage of the account.

Prohibited practices and account security

• Tick scalping and latency arbitrage — Very short trades that exploit delays or errors in the price feed. Almost universally banned, and profits are commonly removed.
• Gambling behaviour — Some firms ban all-in trades or trading that ignores risk, for example opening the full maximum size just before news.
• IP address and VPN rules — Trading from many locations, or from the same IP address as other traders, can trigger reviews for account sharing. Use a consistent connection and tell support if you travel.
• Multiple accounts — Firms usually cap the total allocation one person can hold across accounts.
• Restricted countries — Each firm keeps a list of countries it does not serve. Check it before paying.

Scaling and account growth

• Scaling plan — A schedule for increasing your account size after you meet conditions such as a profit threshold, a number of payouts or a minimum period of trading.
• Maximum allocation — The most capital the firm will let one trader manage, usually across combined accounts. See our list of high-allocation prop firms.
• Profit split increase — Some firms raise your share of profits as you scale or after several payouts.

Payout-specific terms such as minimum withdrawals and payout caps are covered in our payouts guide.