From drawdown rules to payout splits — every term you need to understand, master, and pass your challenge.
Position sizing refers to how much capital a trader allocates to a single trade based on their account size and risk tolerance. It ensures that each trade carries a controlled level of risk, usually expressed as a percentage of the account. Proper position sizing is a key part of risk management and helps traders stay consistent.
Learn moreA profit target is a predefined level at which a trader plans to close a trade or complete a trading objective once a certain amount of profit is reached. It helps traders lock in gains and avoid holding positions for too long. In structured environments like prop trading, a profit target can also refer to the required return a trader must achieve during an evaluation.
Learn moreA prop firm challenge is an evaluation process offered by proprietary trading firms that allows traders to prove their skills before being granted access to a funded trading account. Traders are given a simulated account with defined profit targets and risk parameters — such as maximum daily drawdown and overall drawdown limits — that must be met over a set period. Completing the challenge typically results in the trader receiving capital to trade with, keeping a percentage of the profits generated.
Learn moreProp firm rules are the set of guidelines traders must follow when participating in a prop firm challenge or managing a funded account. These rules are designed to control risk and ensure disciplined trading. They typically include limits on losses, position sizing, trading behavior, and overall account performance.
Learn morePurchasing Power Parity (PPP) is an economic theory that compares different countries' currencies through a basket of goods approach, suggesting that exchange rates should adjust so that identical goods cost the same in different countries. It is used to compare living standards and economic productivity across nations. In forex markets, PPP is one of several factors used to assess whether a currency is overvalued or undervalued.
Learn moreExplore all glossary terms currently grouped under the letter "P".
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