Drawdown, breach, reset, profit split, scaling, consistency rule — the vocabulary you need before reading any rulebook.
Key takeaways
- Most rulebook disputes come from misunderstood definitions, not bad faith.
- Know exactly how your firm defines equity, balance and breach.
- Ask for written clarification of any term you cannot restate in your own words.
Allocation is the notional capital assigned to you. Balance is closed P&L; equity includes open positions. Many rules are measured on equity, which means an unrealised dip can breach a limit even if the trade later recovers.
Daily loss limit is the maximum you may lose in one trading day, and the reset time matters. Overall or maximum drawdown is the floor for the account's life. Static means anchored to the start; trailing means anchored to peak equity.
Breach is a rule violation that ends the account. Reset is repurchasing an evaluation attempt. Profit target is the objective to progress. Consistency rule caps the share of profit from a single day.
Profit split is your share of net profits. Payout cycle is how often you may withdraw. Scaling plan raises allocation and sometimes split as you meet criteria. Refund refers to the evaluation fee returned with an early payout, where offered.
If any of these are defined differently by your firm, that definition governs. Read it, restate it in your own words, and confirm in writing before you trade.
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