Section
Prop Trading
Trading someone else's capital, or a simulation of it, under a rule book: the drawdown floor is your real account size, and the evaluation rewards the size you could keep trading.
A prop firm account advertises a large balance and lets you lose a small part of it. That small part is the number to size against. A trader who risks 1% of a large nominal balance on each trade can breach a modest drawdown limit in a handful of losses, while the same trader sizing against the drawdown can survive a normal losing streak.
Every firm writes its own terms: the drawdown type, the daily loss limit, the profit target, the payout schedule and whether the funded account trades real money at all. Read them line by line. The position size calculator works with any account figure, so enter the drawdown buffer as the account and size from there.
Then decide what the account is for. Some traders treat an evaluation as a paid test of a written plan, with the fee as the cost of finding out whether the plan survives someone else's rules; others treat it as a lottery ticket and size accordingly. The first approach costs the same fee, but it leaves behind a record of trades sized the way they would have to be sized once funded, and that record is worth more than a pass bought with one oversized day.
Columns
All columns →Myth check
Pass the Prop Firm Evaluation at the Size You'd Trade Once FundedPass the evaluation at the size you intend to trade once funded; sizing up to pass fast buys speed with the account's survival.
Argument
A Prop Firm Account Is Leverage Too, Just RentedTreat a prop firm account as leverage on the drawdown buffer, paid for by the fee, and size every trade from the buffer, never the balance.
Answers
Concepts
- Static drawdown
A prop firm loss limit set as a fixed account value when the account opens, so the floor stays in place however high the balance later climbs.