Prop firm
A company that gives traders access to its (usually simulated) capital in exchange for an evaluation fee and a profit split.
Evaluation / challenge
The test phase where you must hit a profit target without breaking the loss rules.
Funded account
The account you get after passing; profits can be withdrawn according to the firm’s rules.
Payout split
Your share of the profits, e.g. 90/10 means you keep 90%.
Drawdown
How far your account falls from a high point. Prop firms set a maximum drawdown (max loss).
Trailing drawdown
A max-loss level that moves up as your balance makes new highs; it never moves down.
Static drawdown
A max-loss level that stays fixed at the same dollar amount below your starting balance.
EOD (end of day)
Measured using your closing balance each day rather than intraday highs.
Daily loss limit (DLL)
The maximum you may lose in a single trading day.
Consistency rule
A limit on how much of your total profit can come from your single best day.
Scaling
Increasing your allowed position size or account size as you hit profit milestones.
Activation fee
A one-time fee some firms charge when you pass and move to a funded account.
Contract
One unit of a futures product. Each contract has a fixed dollar value per point.
Tick
The smallest price move a futures contract can make. ES and NQ tick in 0.25 points.
Point
A full 1.00 price move. ES = $50 per point, MES = $5, NQ = $20, MNQ = $2.
MNQ
Micro E-mini Nasdaq-100 futures: 1/10 the size of NQ, $2 per point ($0.50 per tick).
MES
Micro E-mini S&P 500 futures: 1/10 the size of ES, $5 per point ($1.25 per tick).
ES / NQ
E-mini S&P 500 ($50 per point) and E-mini Nasdaq-100 ($20 per point) futures.
Perpetual (perps)
A crypto futures contract with no expiry date, kept close to spot price by funding payments.
Leverage
Controlling a larger position than your cash alone would allow. Magnifies both gains and losses.
R:R (risk to reward)
How much you risk versus how much you aim to make. 1:2 means risking $100 to make $200.
Stop loss
An order that closes your trade at a set price to cap the loss.
Take profit
An order that closes your trade at a set price to lock in profit.
Slippage
The difference between the price you expected and the price you actually got filled at.
Liquidity
How easily something can be bought or sold without moving the price. In price-action trading it also means clusters of stop orders above highs or below lows.
FVG (fair value gap)
A three-candle pattern where the middle candle moves so fast that the wicks of candles 1 and 3 don’t overlap, leaving a price “gap” traders watch for a revisit.
Support / resistance
Price areas where buying (support) or selling (resistance) has repeatedly stopped a move.
Breakout
When price moves decisively through a support or resistance level.
Session
The main trading hours of a region: Asia, London, New York. See the session clock.
Position sizing
Choosing how many contracts or units to trade so a stop-out costs only your planned risk.
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Educational only. Not financial advice.
