Funded-account (prop firm) rules: examples, not standards
Evaluation programmes impose provider-specific rules like trailing drawdowns and daily limits. Rules differ and change; read the current terms.
Leverage risk. Futures losses can exceed your margin deposit. Contract specs, margins, sessions and funded-account rules here are illustrative; verify current specifications with the exchange, your broker or the provider.
Important context
The rules below are hypothetical examples to teach the arithmetic. Every provider defines its own rules, fees, payout terms and restrictions, and they change frequently. Nothing here describes any specific company. Passing an evaluation is not evidence of a profitable method, and many participants pay repeated fees without receiving payouts.
Common rule types
Trailing drawdown: the liquidation floor follows your highest balance (sometimes intraday equity, sometimes end-of-day) at a fixed distance, and may stop trailing at a certain level. Daily loss limit: breach it and the account is locked or failed. Consistency rules: no single day may exceed a share of total profit. Contract limits and news-trading restrictions are also common.
A trailing drawdown effectively shrinks your cushion as you make profit, so position sizing must respect the distance to the current floor — not the starting balance.
Worked example
A hypothetical $50,000 evaluation with a $2,000 trailing drawdown
- Start: balance $50,000, floor $48,000.
- Balance peaks at $51,500 → floor trails to $49,500.
- Balance falls to $50,200: cushion to floor = $700, not $2,200.
- If you risk $300 per trade (say 6 MES × 10 points × $5), two full losses leave $100 of cushion. Size to the cushion.
Compute your live cushion to the floor before every session.
Common misconceptions
“All funded programmes use the same rules.”
Definitions of drawdown, payout eligibility and restrictions vary widely and change.
“Passing proves I'm a profitable trader.”
A short evaluation window is a tiny sample; luck plays a large role.
Checkpoint