Trading glossary
Master the language of trading with our comprehensive glossary. From basic concepts to advanced terminology, understand every term you'll encounter in prop trading and financial markets.
A
- Account BalanceAccount Management
- Account Balance is the current value of your trading account, reflecting your realized profits and losses. It updates as trades are closed and is a key metric used to monitor progress toward profit targets or drawdown limits.
- Account SizeGeneral
- Account Size in prop trading refers to the starting virtual balance of your evaluation or funded account. It determines your buying power, position limits, and risk parameters throughout the trading process.
C
- CandlestickTechnical Analysis
- Candlestick is a type of chart used in trading that shows the open, high, low, and close prices for a specific time period. Each candlestick visually represents price movement and helps traders analyze market sentiment and patterns.
- Consistency RuleTrading Process
- Consistency Rule is a requirement set by some prop firms to ensure traders generate profits steadily over time rather than through one or two oversized trades. It encourages disciplined trading by spreading gains across multiple days or trades.
D
- Daily Loss LimitTrading Rules
- Daily Loss Limit is the maximum amount you’re allowed to lose in a single trading day. If this limit is exceeded, the account is typically disabled or disqualified to prevent further losses and enforce disciplined risk management.
- DDT RulesGeneral
- DDT Rules (Daily Drawdown Threshold) refer to the maximum amount a trader is allowed to lose in a single trading day during an evaluation or funded phase. Violating this limit typically results in disqualification or loss of the account, making daily risk management essential.
- DrawdownRisk Management
- Drawdown is the reduction in your account balance from a peak to a low point, usually measured during a losing streak or series of trades. It reflects the risk and volatility of your trading and is a key metric monitored by prop firms to manage account health.
E
- EquityAccount Management
- Equity is the real-time value of your trading account, calculated by adding your current account balance and any unrealized profits or losses from open trades. It reflects your true account value at any given moment and is often used to monitor drawdown and risk.
- EvaluationTrading Process
- Evaluation is the initial phase in prop trading where traders must meet specific performance criteria such as profit targets and drawdown limits to prove their skills. Successfully completing the evaluation earns you a funded account and gets you paid for your performance.
F
- FlushacitoProp Trading
- A term coined by RIPS to describe a violent market drop or rapid flush of liquidity, often triggered by aggressive selling or stop runs. When the market dives hard and fast, clearing out weak positions and inducing panic, that’s a classic Flushacito. It’s not just a dip, it’s the kind of flush that gets remembered.
- Funded AccountTrading Rules
- Funded Account is the live trading account you receive after successfully passing the evaluation phase. It allows you to trade with the firm’s capital and earn real payouts based on your performance and profit split agreement.
L
- LeverageMarket Terms
- Leverage is the ability to control a larger position size with a smaller amount of capital, provided by the prop firm or broker. It amplifies both potential profits and potential losses, and this applies whether you're trading a single account or managing multiple accounts with different prop firms.
- LiquidityMarket Terms
- Liquidity refers to how quickly and easily an asset can be bought or sold in the market without significantly affecting its price. High liquidity means tighter spreads, faster execution, and smoother trade entry and exit, especially important when trading across multiple accounts or prop firms.
- Lot Size LimitTrading Rules
- Lot Size Limit is the maximum number of contracts or lots you’re allowed to trade at one time in a prop firm account. This rule helps control risk and ensures traders don’t exceed position size restrictions set by the firm.
M
- MarginAccount Management
- The required deposit to open a leveraged trading position.
- Margin CallAccount Management
- A demand from a broker for additional funds when account equity falls below the required margin level.
- Market OrderTrading Process
- An order to buy or sell immediately at the best available price. Fast but offers less control over entry or exit.
- Max FundedGeneral
- Max Funded refers to the highest number of funded accounts or total capital allocation a trader can receive from a prop firm. Reaching this limit means you've successfully scaled your trading across one or multiple accounts, often unlocking larger payout potential and additional perks.
- Maximum DrawdownTrading Rules
- The maximum percentage or dollar amount an account can decline from its highest point.
- Min DaysGeneral
- Min Days refers to the minimum number of trading days required to complete an evaluation with a prop firm. This rule ensures traders demonstrate consistency over time rather than passing with just one or two lucky trades.
- Moving AverageTechnical Analysis
- A technical indicator that smooths price data by creating a constantly updated average price.
N
- News TradingTrading Rules
- News Trading is a strategy that involves placing trades based on the release of economic news or major financial events. It takes advantage of the sharp volatility that often follows announcements like CPI, FOMC, NFP, or earnings reports. Some prop firms allow news trading, while others restrict or disqualify trades placed during these high-impact events.
P
- PayoutTrading Process
- Payout is the portion of profits a trader receives from a funded account after meeting a prop firm’s requirements. This is your actual take-home earnings, typically based on a profit split agreement between you and the firm.
- Payout ScheduleMarket Terms
- The frequency at which a trader can request or receive payouts from a funded account. Some firms offer weekly, bi-weekly, or monthly payouts.
- PerkacitoProp Trading
- A term coined by RIPS to describe a sneaky upward grind in the market where price slowly perks higher without major pullbacks. It is not an explosive rip but a steady climb that traps sidelined traders and squeezes shorts. When the market won’t stop inching up and makes you wish you bought earlier, that’s a classic Perkacito.
- Position SizeRisk Management
- Position Size refers to the number of contracts, lots, or shares you take on in a single trade. It directly impacts your risk and potential reward, and prop firms often place limits to ensure traders manage exposure responsibly.
- Price ActionTrading Basics
- A trading strategy based on interpreting raw price movements on a chart, often without relying on indicators.
- Profit TargetTrading Process
- Profit Target is the specific amount of profit a trader must reach during the evaluation phase to qualify for a funded account. It’s a key milestone that demonstrates your ability to trade consistently and manage risk effectively.
- Prop FirmProp Trading
- A company that funds traders with its own capital in exchange for a share of the profits. Traders must meet specific criteria to access and maintain funded accounts.
R
- ResistanceTechnical Analysis
- A price level where an uptrend can be expected to pause or reverse due to selling pressure.
- RIPacitoProp Trading
- A term coined by RIPS to describe a sharp and explosive move to the upside, often driven by aggressive buying or short covering. When the market surges quickly, leaving bears scrambling and buyers chasing, that’s a Ripacito. It’s not just a bounce, it’s a powerful rip that demands attention.
- Risk-Reward RatioRisk Management
- The ratio comparing the potential profit of a trade to its potential loss, typically expressed as 1:2 or 1:3.
S
- ScalingGeneral
- The process of increasing your account size based on good trading performance. Some firms offer automatic scaling plans.
- Shot ClockTrading Basics
- A term popularized by RIPS referring to a self-imposed timer you set on your phone after a trade, especially a loss, to prevent impulsive decisions and give yourself time to reset. It is a mental pause button that helps traders avoid tilt, regain composure, and make their next move with intention instead of emotion.
- SpreadMarket Terms
- The difference between the bid (selling) price and ask (buying) price of a financial instrument.
- Stop LossRisk Management
- An order placed to close a position at a predetermined loss level to limit potential losses.
- Straight To FundedProp Trading
- A type of prop firm program that allows traders to skip the evaluation phase and start directly with a funded account. It typically requires a higher upfront fee but gives immediate access to real payouts and live trading conditions without needing to hit profit targets first.
- SupportTechnical Analysis
- A price level where a downtrend can be expected to pause or reverse due to buying interest.
T
- Take ProfitRisk Management
- An order placed to close a position at a predetermined profit level to secure gains.
- TiltTrading Basics
- A state of emotional frustration or loss of control that leads to impulsive and irrational trading decisions. Tilt often occurs after a losing trade or missed opportunity and can quickly spiral into larger losses if not recognized and managed.
- TrendTechnical Analysis
- The general direction of price movement over time, classified as uptrend, downtrend, or sideways.
V
- VolatilityMarket Terms
- The degree of price fluctuation in a financial instrument over a specific period.
W
- WatchlistGeneral
- A curated list of assets or instruments a trader is monitoring for potential trade setups.
- Win RateGeneral
- The percentage of your trades that are profitable over a set period. A key performance metric used by prop firms to assess trader consistency.
- WithdrawalProp Trading
- The act of transferring earned profits from your funded account to your personal bank or payment method after a payout is approved.
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