What is a profit split in prop firm?

Profit split is the distribution of gains between the trader and the prop firm. For example, an 80/20 profit split means the trader keeps 80% of profits and the prop firm retains 20%. At Phidias, the profit split can reach 80% for the trader.

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Trading & Prop Firm Glossary

Q: What is a drawdown in trading?

Drawdown is the maximum loss allowed on a trading account, measured from the initial balance or the highest point reached. In prop firm, exceeding the drawdown results in losing the account. There are several types: static (fixed), trailing (following) and EOD (calculated at end of day).

Q: What does OTP mean in prop firm?

OTP means One-Time Payment. It is a purchase mode where the trader pays once to access a funded account, with no recurring monthly subscription. Phidias Propfirm offers this account type with the LUCAS code for -80% off.

Q: What is the difference between trailing drawdown and static drawdown?

Static drawdown stays fixed relative to the initial account balance. Trailing drawdown follows profits in real time: if your balance rises, the drawdown threshold also rises. Trailing drawdown is more restrictive as it can trigger even when the overall balance is positive.

Q: What is a funded account?

A funded account is a trading account provided by a prop firm with real capital. The trader does not risk their own money but must respect strict rules (drawdown, profit target). They keep part of the profits generated via the profit split.

All futures and prop firm trading terms explained simply. From A to Z, find the essential definitions to understand this universe.

Introduction: Why this glossary?
Alphabetical navigation
A — Activation Fee, Ask/Bid, Backtesting...
C — Challenge, Funded account, Copy Trading...
D — Drawdown, dxFeed...
E — Evaluation, ES...
F — Futures, FTMO...
G — Gap...
H — Hedging...
I — ICT...
K — Kill Zone...
L — Leverage, Liquidation, Lot...
M — Margin, Market Profile, Micro-contract...
N — NQ, NinjaTrader...
O — Order Flow, OTP...
P — Payout, Profit Split, Prop Firm...
R — Reset, Rithmic, Risk Management...
S — Scalping, Spread, Stop Loss...
T — Take Profit, Trailing Drawdown...
V — Volume Profile...
Y — YM...
Frequently asked questions

Why a Trading & Prop Firm glossary?

When starting out in the world of futures trading and prop firms, the jargon can be intimidating. Between drawdown, OTP, trailing, profit split and dozens of other technical terms, it is easy to feel lost.

This glossary is designed for traders who want to understand quickly and simply every term used in the prop firm universe. Whether you are a beginner or intermediate trader, this resource will serve as a permanent reference.

Each definition is written in plain English, with concrete explanations tailored to the context of prop firms futures. Do not hesitate to bookmark this page!

Tip: Use the alphabetical navigation below to jump directly to the letter you are interested in, or press Ctrl+F to search for a specific term.

Activation Fee: One-time fees charged by some prop firms when the trader moves to a funded account. This amount covers the costs of setting up the live account. Not all prop firms charge these fees — at Phidias Propfirm, conditions vary by chosen account type.
Ask: The lowest price at which a seller is willing to sell a futures contract. It is the price you pay when you buy (go long). The difference between ask and bid is the spread.
Backtesting: A method that consists of testing a trading strategy on historical data to evaluate its past performance. Backtesting is essential before risking real capital or attempting a prop firm challenge. It validates entry, exit and risk management rules.
Bid: The highest price at which a buyer is willing to buy a futures contract. It is the price you receive when you sell (go short). The difference between bid and ask is the spread.

Order Book: Interface that displays in real time all pending buy and sell orders on a market. The order book shows liquidity available at each price level and is an essential tool for order flow trading.
Challenge: Evaluation phase offered by prop firms to test a trader's skills. The trader must reach a profit target while respecting drawdown and risk management rules. See our guide on passing a challenge.
Funded Account: Trading account provided by a prop firm with real capital after passing the evaluation. The trader does not risk their own money but shares profits with the prop firm under the defined profit split. It is the ultimate goal of any prop firm trader.
Contract: Standard unit of measure on futures markets. A contract represents an agreement to buy or sell an asset at a determined price and date. On the E-mini S&P 500 (ES), one point equals 50 USD. See also: understanding futures ES, NQ, YM, RTY.
Copy Trading: Practice of automatically copying another trader's trades. Most prop firms prohibit copy trading between funded accounts, as they require each trader to make their own trading decisions independently.

Drawdown: Maximum loss allowed on a trading account relative to the initial balance or highest point reached. In prop firm, exceeding the drawdown results in losing the account. There are three main types: static, trailing and EOD. See our detailed article on drawdown in prop firm.
EOD Drawdown (End of Day): Type of drawdown that is only recalculated at the end of each trading day. Unlike real-time trailing drawdown, EOD drawdown does not follow intraday profits. This is an advantage for traders as their intraday gains are not immediately "locked in".
Static Drawdown: Fixed drawdown calculated relative to the initial account balance. For example, with a 2,500 USD static drawdown on a 50,000 USD account, the loss threshold stays at 47,500 USD regardless of profit made. It is the most favorable type of drawdown for traders. Phidias offers static accounts.
Trailing Drawdown: Drawdown that follows profits in real time. If your balance rises to 52,000 USD on a 50K account with 2,500 USD of trailing, the threshold rises to 49,500 USD. This type of drawdown is more restrictive and can trigger even when the account is globally in profit.
dxFeed: Market data provider used by some prop firms and trading platforms. dxFeed delivers real-time price feeds. It is generally considered less performant than Rithmic for scalping due to potentially higher latency.

Evaluation: Testing process imposed by prop firms before granting a funded account. The evaluation can take the form of a one- or two-phase challenge. Some prop firms like Phidias also offer OTP accounts that simplify this process. See our comparison OTP vs Evaluation.
ES (E-mini S&P 500): Futures contract based on the S&P 500 index, one of the most traded instruments in the world. One ES point equals 50 USD, and one tick (minimum move) equals 12.50 USD. It is the reference contract for most prop firm futures traders. See our complete guide on futures ES, NQ, YM and RTY.

Futures: Derivative financial instruments that oblige the buyer and seller to exchange an asset at a price fixed on a future date. Futures on indices (ES, NQ, YM, RTY) are the most popular in prop firm. Discover the differences between futures and forex.
FTMO: One of the most well-known prop firms in the world, mainly specialized in forex and CFD. FTMO offers two-phase challenges with strict rules. See our complete FTMO 2026 review to learn more.

Gap: Price gap that occurs between the close of one session and the open of the next, without any transaction happening between these two levels. Gaps are common on futures, especially after a weekend or major economic announcement. They represent a significant risk for overnight positions.

Hedging: Strategy of taking an opposite position to reduce the risk of an existing position. For example, being long on ES and short on NQ simultaneously. Some prop firms allow hedging, others prohibit it. Always check the rules before using it.

ICT (Inner Circle Trader): Trading methodology developed by Michael J. Huddleston, focused on institutional liquidity concepts, order blocks, fair value gaps and kill zones. Very popular among futures and forex traders. See our guide ICT trading strategy.

Kill Zone: Periods of the day when volatility and liquidity are highest, offering the best trading opportunities. The main kill zones are: London Open (2-5am EST), New York Open (7-10am EST) and London Close (10am-12pm EST). See our article dedicated to ICT kill zones for futures.

Leverage: Mechanism that allows control of a position larger than the capital deposited. On futures, leverage is built into the contract structure via margin. An ES contract at ~5,000 USD of margin controls ~250,000 USD of notional value, leverage of about 50:1.
Liquidation: Forced closure of a position by the broker or prop firm when the account reaches the drawdown threshold or minimum margin level. In prop firm, liquidation generally means losing the account. Risk management is essential to avoid it.
Lot: Term mainly used in forex to designate a standardized trading unit. In futures, we talk rather about "contract". A standard forex lot represents 100,000 units of the base currency. In prop firm futures, the term "contract" is preferred.

Margin: Amount of capital required to open and maintain a position on futures markets. Initial margin is needed to open a position, while maintenance margin is the minimum required to keep it open. In prop firm, margin limits are generally more restrictive.
Market Profile: Technical analysis tool that organizes price data based on time and volume. It displays a bell-shaped distribution showing where price spent the most time (Value Area). Widely used by futures traders to identify support/resistance zones. See our guide Market Profile intraday setup.
Micro-contract: Reduced version of a standard futures contract, generally 1/10th the size. For example, Micro E-mini S&P 500 (MES) equals 5 USD per point versus 50 USD for standard ES. Micro-contracts are ideal for beginners and for refining risk management.
Mini-contract (E-mini): Futures contract reduced in size compared to the original "full-size" contracts. E-minis (ES, NQ, YM, RTY) are the most traded contracts in prop firm futures. An E-mini ES equals 50 USD per point. They offer a good balance between tick value and accessibility.

NQ (E-mini Nasdaq 100): Futures contract based on the Nasdaq 100 index, made up of the 100 largest tech companies. One NQ point equals 20 USD, and one tick equals 5 USD. NQ is more volatile than ES, which makes it popular with scalpers but also more risky. See our futures guide.
NinjaTrader: Popular trading platform specialized in futures. NinjaTrader offers advanced charting, order flow and backtesting tools. Compatible with most prop firms futures, notably via the Rithmic data feed. See our Rithmic + NinjaTrader setup guide.

Order Flow: Market analysis method based on studying real order flow (buys and sells) rather than simple price moves. Order flow lets you see buyer and seller activity in real time via the footprint chart. See our guide Order Flow futures trading.
OTP (One-Time Payment): Single payment mode offered by some prop firms, as an alternative to monthly subscription. With an OTP, the trader pays once and directly accesses a funded account or simplified evaluation. Phidias Propfirm offers very competitive OTP accounts with the LUCAS code for -80%. See our comparison OTP vs Evaluation.

Payout: Process by which a trader withdraws their profits from their funded account. Each prop firm has its own payout rules: minimum delay, minimum amount, authorized frequency. At Phidias, payouts are processed quickly and available from the first trading days.
Pip: Smallest unit of price variation in forex (0.0001 for most pairs). In futures, we use the term "tick" instead. A pip has no fixed dollar value because it depends on the currency pair and lot size.
Position Sizing: Method of calculating the number of contracts to trade based on available capital and acceptable risk per trade. Good position sizing is essential in prop firm to respect drawdown. The common rule is to risk only 1-2% of the account per trade.
Profit Split: Distribution of gains between the trader and the prop firm on a funded account. For example, an 80/20 split means the trader keeps 80% of profits. Profit split varies by prop firm: from 70/30 to 90/10. At Phidias, the split is competitive and favorable to the trader.
Profit Target: Profit amount a trader must reach to validate an evaluation phase or challenge. For example, a 3,000 USD profit target on a 50K account means the trader must generate 3,000 USD in net gains. It is one of the key conditions to move to a funded account.
Prop Firm (Proprietary Trading Firm): Trading company that provides capital to traders in exchange for a share of profits. The trader does not risk their own capital but must pass an evaluation and respect strict rules. See our complete prop firms futures guide and the 2026 comparison.

Reset: Option offered by some prop firms allowing reset of an evaluation account after failure (exceeding drawdown). Reset is generally paid and brings the account balance back to its initial level. It is a less expensive alternative than buying a new challenge.
Rithmic: Market data and order execution infrastructure widely used in the futures universe. Rithmic is renowned for low latency and data quality, making it ideal for scalping. Phidias uses Rithmic. See our Rithmic setup guide.
Risk Management: All techniques used to limit losses and protect capital. In prop firm, risk management is crucial because exceeding drawdown means losing the account. This includes position sizing, stop losses, and emotional discipline. See our complete risk management guide.
RTY (E-mini Russell 2000): Futures contract based on the Russell 2000 index, which tracks 2,000 US small caps. One RTY point equals 50 USD, one tick equals 5 USD. RTY is less liquid than ES or NQ but offers interesting volatility for some trading styles.

Scalping: Ultra-short-term trading style that aims to capture small price moves over very short durations (seconds to a few minutes). Scalping requires fast execution, low latency and tight spreads. See our futures scalping guide.
Spread: Difference between the buy price (ask) and the sell price (bid) of an instrument. A tight spread indicates good liquidity. On ES, the spread is generally one tick (0.25 point = 12.50 USD) during regular market hours.
Stop Loss: Automatic order that closes a position when price reaches a predefined loss level. Stop loss is the fundamental risk management tool in prop firm. Placing a stop loss on every trade is an essential rule to protect drawdown and survive long term.
Swing Trading: Trading style that aims to capture price moves over several days to several weeks. Swing trading is less stressful than scalping but requires being able to hold positions overnight, which is not always allowed in prop firm.

Take Profit: Automatic order that closes a position when price reaches a predefined profit level. Take profit lets you lock in gains without having to monitor the market constantly. A good risk/reward ratio (take profit vs stop loss) is essential for profitability.
Trailing Drawdown: See "Trailing Drawdown" above. It is the most common type of drawdown in prop firm, where the maximum loss threshold follows realized profits. It is more restrictive than static drawdown. See our article Prop firm drawdown explained to understand all the nuances.
Trading Journal: Tool where the trader records each trade with details (entry, exit, reason, emotions, result). Keeping a trading journal is essential to progress and identify strengths and weaknesses. See our guide on the prop firm trading journal.

Volume Profile: Analysis tool that displays the volume traded at each price level over a given period. Unlike Market Profile which uses time, Volume Profile focuses on volume. It identifies high-interest zones (POC, Value Area). See our guide Volume Profile futures trading.

YM (Mini Dow): Futures contract based on the Dow Jones Industrial Average index (30 US industrial stocks). One YM point equals 5 USD, and one tick equals 5 USD. YM is less volatile than NQ and offers more predictable moves, making it a popular choice for traders starting in futures.

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Frequently asked questions

What is a drawdown in trading?

Drawdown is the maximum loss allowed on a trading account. In prop firm, it is a threshold not to exceed under penalty of losing the account. There is static drawdown (fixed), trailing (following) and EOD (calculated at end of day). See our dedicated drawdown article for full understanding.

What does OTP mean in prop firm?

OTP means "One-Time Payment". It is a purchase mode that is an alternative to monthly subscription: you pay once to access your account. Phidias offers OTP accounts with the LUCAS code to benefit from -80%. See our comparison OTP vs Evaluation.

What is the difference between trailing drawdown and static drawdown?

Static drawdown stays fixed relative to the initial balance (e.g., always at 47,500 USD for a 50K account). Trailing drawdown follows your profits: if your balance rises, the threshold rises too. Static is significantly more favorable for traders.

What is a profit split?

Profit split is the distribution of gains between you and the prop firm. An 80/20 split means you keep 80% of your profits. At Phidias, the profit split is competitive and favorable to the trader.

What is a funded account?

A funded account is a trading account with capital provided by the prop firm. You trade with their money and share the profits. To get a funded account, you generally have to pass an evaluation (challenge) or buy an OTP account. Discover how to get funded.