Every prop firm publishes a rule set, and most traders skim it. The rules below are the ones that end accounts, and the differences between firms are larger than people expect.
Profit target
The amount you need to make, usually a percentage of the starting balance. Commonly around eight to ten per cent in a first phase and lower in a second. This is the rule everyone reads and the one that causes the least trouble.
Maximum daily loss
The most you can lose in a single trading day before the account fails. Two details matter enormously and are frequently missed.
First, whether it is calculated on closed positions only or includes floating losses on open trades. If floating losses count, an open position moving against you can fail the account without you closing anything.
Second, when the day resets, and in which timezone. A position held across the firm's daily boundary is assessed against a fresh limit, which changes the risk profile of holding overnight.
Maximum overall loss, and the two kinds of drawdown
This is the single biggest source of confusion in prop trading.
Static drawdown is measured from your starting balance. On a $100,000 account with a ten per cent limit, the floor sits at $90,000 and stays there permanently. Profits increase your buffer.
Trailing drawdown follows your equity high upward. Take the same account to $110,000 and the floor moves to $99,000. You can be up on the evaluation overall and still fail by giving back gains.
Trailing drawdown is materially harder, and it punishes exactly the behaviour that feels safest: taking a large win and then trading normally afterwards. Some firms stop the trail once the account reaches the starting balance plus the target. Others trail throughout. Check which.
Minimum trading days
Most firms require a minimum number of days with at least one position. This exists to stop someone hitting the target with a single leveraged trade. It is rarely a problem, but hitting the target in two days and then discovering you need eight is an avoidable irritation.
Consistency rules
The rule most likely to catch out a trader who is otherwise doing well. A consistency requirement caps how much of your total profit can come from a single day or a single trade, often somewhere between twenty and fifty per cent.
The effect is that one enormous winning day can invalidate an otherwise passing evaluation. If your firm has this rule, it changes how you should size positions from the very first trade, not from the point at which you notice.
News, weekends, and holding periods
Restrictions vary widely. Some firms prohibit opening positions within a window around high-impact news. Some prohibit holding over the weekend. Some prohibit holding overnight at all on certain account types.
These rules are usually well down the terms document and are the ones traders most often violate through ignorance rather than choice.
Automated trading
Policies on expert advisors range from complete freedom to an outright ban on anything not manually placed. Many firms also prohibit specific strategy types regardless of automation: latency arbitrage, tick scalping, and grid or martingale systems appear on most prohibited lists.
How to read your rule set properly
Before you place a single trade, write down the answers to these:
- Is the drawdown static or trailing, and does the trail ever stop?
- Does the daily loss include floating positions?
- What time does the trading day reset, in which timezone?
- Is there a consistency requirement, and at what percentage?
- What is the minimum number of trading days?
- Are there news, weekend, or overnight restrictions?
Six answers, fifteen minutes. It is the highest-value quarter of an hour in the whole evaluation.
If you would rather hand the rule management to people who do it daily, that is what our desk is for. Our plans are on the pricing page.
Static versus trailing, side by side
This is the difference that catches out the most people, so here it is with numbers. Both accounts start at $100,000 with a 10% maximum loss.
| Account equity | Static floor | Trailing floor |
|---|---|---|
| $100,000 (start) | $90,000 | $90,000 |
| $105,000 | $90,000 | $95,000 |
| $110,000 (high) | $90,000 | $100,000 |
| Back to $101,000 | Safe, $11,000 of room | Safe, but only $1,000 of room |
| Back to $99,000 | Safe | Account failed |
On the trailing account you can be up $9,000 on your starting balance at the high, give most of it back, and fail while still profitable overall. On the static account the same sequence is a non-event.
If your firm uses trailing drawdown, the practical implication is that every gain tightens your rope. Position size has to be recalculated against the current floor, not the balance you started with.
The consistency rule, worked through
Say the rule caps any single day at 30% of total profit, and the target is $8,000.
You have a spectacular Tuesday and make $5,000. That day is now 62% of your profit, so you cannot pass until total profit reaches roughly $16,700, at which point the $5,000 day falls back under 30%. One good day has effectively doubled the work required.
This is why desks operating under consistency rules deliberately cap their upside on any single session. Winning too much on one day is a real risk, which is counterintuitive until you have hit it.
Your pre-trade checklist
Answer these before placing a single trade, and keep the answers somewhere visible:
| Question | Your answer |
|---|---|
| Drawdown type | Static / Trailing |
| Does the trail stop at any point? | Yes / No |
| Daily loss includes floating P&L? | Yes / No |
| Daily reset time and timezone | |
| Consistency rule percentage | |
| Minimum trading days | |
| News / weekend / overnight limits | |
| My personal daily stop |
Common questions
Which drawdown type should I look for?
Static is meaningfully easier to trade, particularly once the account is in profit. If two firms are otherwise comparable, the static drawdown is usually the better choice even at a slightly higher fee.
Does the daily loss limit include open positions?
It depends on the firm, and it is one of the most important things to check. Where floating losses count, a position moving against you can fail the account without you closing anything.
What happens if I breach a rule by a small amount?
Rule breaches are generally automated and absolute. A dollar over the limit is over the limit. There is rarely discretion, which is why the working buffer needs to be much larger than the rule suggests.
Can I hold trades over the weekend?
Some firms allow it, some prohibit it outright, and some allow it only on certain account types. Check before Friday afternoon rather than after.
Do these rules still apply once I am funded?
Yes, in almost all cases. The evaluation is not a gate you pass through and forget. The same drawdown and consistency rules typically govern the funded account for as long as you hold it.