Crypto Prop Trading Glossary: 60+ Terms Explained

This prop trading glossary explains the words you meet when buying a crypto challenge, trading it and getting paid. The definitions are short and plain, and where a term has its own rules page or calculator on CryptoPropFirms, we link to it so you can go deeper.

Terms are grouped alphabetically. Crypto prop firms borrow vocabulary from both forex prop trading and crypto exchanges, so you will find rule terms such as consistency rule and trailing drawdown next to market terms such as funding rate, mark price and liquidation.

Most failed challenges come down to two entries in this glossary: daily drawdown and position size. If you read nothing else, read those two.

A

Account size

The notional capital a challenge or funded account is quoted at, such as $10,000 or $100,000. It sets the dollar value of every percentage rule, so a 5% daily limit means $500 on a $10K account and $5,000 on a $100K one. Compare fees by size on our account size pages.

Activation fee

A charge paid after you pass, before the funded account goes live. Pay-later plans such as Mubite's Nitro keep the upfront price low and move most of the cost into this fee.

Add-on

An optional extra bought at checkout, such as a higher profit split, a faster payout cycle or removal of a rule. Each one raises the fee, so price them as part of the challenge.

Altcoin

Any coin other than bitcoin. Many firms list hundreds of altcoin perpetuals but cap their leverage well below BTC and ETH, and thin altcoin books are where slippage hurts most.

B

Balance-based drawdown

A drawdown limit measured from closed-trade balance rather than live equity. Open losses do not count until you close, which gives more room than an equity-based limit but is less common at crypto firms.

Best-day rule

A cap on how much of your total profit can come from a single day, for example 30% or 40%. It is one form of the consistency rule and can delay a payout after one large winning day.

Breach

Any rule violation that ends an account, most often hitting the daily or maximum loss limit. A hard breach closes the account immediately; a soft breach may only void the trade or the profit from it.

C

Challenge

The paid test you must pass before a firm gives you a funded account. It has a profit target, loss limits and sometimes a minimum number of trading days.

Consistency rule

A rule that stops you from passing or getting paid on the back of one oversized day or trade. It is usually written as a percentage of total profit. See our full guide to the consistency rule.

Copy trading

Mirroring another trader's positions, or your own across several accounts. Most firms ban copying other people and limit copying between your own accounts, because it multiplies the firm's exposure to one strategy.

Cross margin

A margin mode where all open positions share one pool of collateral. A loss on one position can eat the margin of others, so a single bad trade can push the whole account toward liquidation.

D

Daily drawdown

The most you may lose in one trading day, usually 2% to 5% of the starting or day-opening balance. Crypto trades around the clock, so check the reset time, which is often 00:00 UTC. Details on the daily drawdown page.

DEX

A decentralised exchange that settles trades on a blockchain, such as Hyperliquid for perpetuals. Some prop firms route or price trades off a DEX so fills and prices can be checked on chain. See on-chain prop firms.

Discount code

A coupon that cuts the challenge fee, typically by 5% to 30%. A discount matters most on the account you will repeat, so compare the price after the code, not the list price.

Drawdown

The fall in account value from a reference point. Prop firms set two limits, daily and maximum, and measure them either statically or with a trailing floor. Model your room with the drawdown calculator.

E

Equity

Account balance plus or minus the profit or loss on open positions. Most crypto firms measure loss limits on equity, so an open trade can breach the account before you close it.

Evaluation

Another word for the challenge stage. A firm may call each part of it a phase or step, and the funded stage begins only after the evaluation is passed and KYC is complete.

Exchange

The venue where orders are filled or priced, such as Bybit, BloFin or Kraken. Firms that execute on a real exchange give you its order book, fees and liquidation engine; others run a simulated copy of exchange prices.

F

Fee refund

Return of the challenge fee, usually paid with your first funded payout. HyroTrader, for example, refunds its One-Step and Two-Step fee this way. A refund only helps if you reach a payout.

Funded account

The account you trade after passing, where profits are shared with you. At most crypto firms it is still a simulated account; your payout comes from the firm, not from a live exchange balance.

Funding rate

A periodic payment between long and short holders of a perpetual contract that keeps its price close to spot. When the rate is positive, longs pay shorts, often every eight hours. Holding a large position through several funding windows can cost more than the trading fees.

G

Gambling rule

A catch-all rule against behaviour a firm sees as betting rather than trading, such as risking the whole daily limit on one entry or opening max-size positions right before news. It is applied with discretion, so read the examples in the terms.

H

Hedging

Holding opposite positions at once, either on one account or across accounts. Hedging inside one account is often allowed; hedging across two accounts at the same firm, or across firms, is a common reason for denied payouts.

High-water mark

The highest equity or balance an account has reached. A trailing drawdown follows the high-water mark upward, so your loss floor rises as the account makes new highs.

I

Instant funding

An account you trade for payouts from day one, with no challenge. You pay a higher fee and usually accept tighter loss limits or a lower split. Compare offers on our instant funding page.

Isolated margin

A margin mode where each position has its own collateral. A losing position can be liquidated without touching the rest of the account, which makes per-trade risk easier to cap.

Inactivity rule

A rule that closes an account after a set period with no trades, often 30 days. Place a small trade before the deadline if you plan to pause.

K

KYC

Know Your Customer: the identity check a firm runs before funding or paying you, usually a photo ID and a selfie. The stage at which it happens decides what a failed check costs. See crypto prop firm KYC.

L

Leverage

Borrowed exposure relative to account equity. At 1:10, $1,000 of margin controls $10,000 of BTC. Firms often allow 1:100 on BTC and ETH and much less on altcoins, but your loss limits, not leverage, should set your size.

Limit order

An order to buy or sell at a set price or better. Limit orders avoid slippage and often pay a lower maker fee, but they may not fill in a fast market.

Liquidation

Forced closure of a leveraged position when margin can no longer cover the loss. On a prop account you usually breach the drawdown limit long before liquidation, so treat the loss limit as your real stop.

Lot

A standard unit of position size. Crypto CFD firms quote size in lots, where one lot often equals one BTC or one ETH; perpetual-based firms quote in coins or dollars of notional.

M

Maker and taker fees

Exchange fees for adding liquidity (maker, a resting limit order) or removing it (taker, a market order). Taker fees are higher, and on a busy scalping account they can decide whether you hit the profit target.

Mark price

The fair price an exchange uses to value open positions and trigger liquidations, built from index prices rather than the last trade. It stops a single wick on one venue from wiping out positions.

Max drawdown

The total loss an account may take before it is closed, often 6% to 10% of the starting balance. It can be static or trailing, which changes how much room you have after a winning run.

Max lot

The largest position the firm allows on one trade or in total, set in lots, coins or notional dollars. It stops you from sizing up beyond what the account was built for, even when leverage would allow it.

Minimum trading days

The number of separate days you must place a trade before a phase counts as passed. Many crypto firms have dropped this rule, but where it exists, a fast pass still waits for the calendar.

N

News rule

A restriction on opening or closing trades in a window around major releases, such as US CPI or FOMC decisions. Crypto-first firms often allow news trading; multi-asset firms more often restrict it on funded accounts.

Notional value

The full dollar size of a position: price times quantity. A 0.5 BTC long at $100,000 has a notional value of $50,000, whatever margin backs it.

O

One-step challenge

A single-phase evaluation: hit one profit target within the loss limits and you are funded. It is quicker than two-step but usually has a tighter drawdown. See one-step crypto prop firms.

On-chain prop firm

A firm whose trades, balances or payouts can be checked on a public blockchain, often trading on a DEX such as Hyperliquid. Read more on on-chain prop firms.

Order book

The live list of resting buy and sell orders on an exchange. A deep book absorbs large orders with little slippage; a thin altcoin book does not.

P

Pay-later challenge

A challenge with a small upfront fee and the rest due only after you pass, such as WenCrypto's Buy Now Pay Later plan. It cuts the cost of failing but often costs more in total if you pass.

Payout cycle

How often you may request a payout, such as on demand, every 7 days or every 14 days. Some firms shorten the cycle as you complete more payouts. Read our payouts guide.

Perpetual futures

Futures contracts with no expiry, the main product at crypto prop firms. Their price is tied to spot through the funding rate, and they allow leverage and easy short selling.

Phase

One stage of a multi-step evaluation. In a two-step challenge, phase 1 usually has the higher profit target and phase 2 a lower one, under the same loss limits.

Position size

How much you buy or sell on one trade, measured in coins, lots or notional dollars. Set it from your stop distance and the amount you are willing to lose with the position size calculator.

Profit split

The share of funded-account profit paid to you, commonly 80% to 90%. Some firms raise it after several payouts or sell a higher split as an add-on.

Profit target

The gain needed to pass a phase, usually 5% to 10% of the starting balance. There is often no time limit, so the target matters less than the loss limits that apply while you chase it.

R

Refundable fee

A challenge fee the firm returns, usually with the first or third funded payout. It turns the fee into a deposit if you succeed, but it is still lost if you fail.

Reset

A paid restart of a failed or stalled challenge at the same size, usually at a discount to the full fee. Factor at least one reset into the real cost of an account.

Risk per trade

The amount you stand to lose if a trade hits its stop, usually written as a percentage of the account. Keeping it at 0.5% to 1% means several losers in a row still leave room inside the daily limit.

S

Scaling plan

A path to a larger account after consistent profitable months or a number of payouts. Some firms double the balance; others add 25% at a time. It is worth more than a slightly higher split if you plan to stay.

Simulated account

An account trading on demo capital that mirrors real prices. Nearly all crypto prop accounts are simulated, and profits are paid from the firm's revenue rather than a live exchange balance.

Slippage

The gap between the price you expect and the price you get. It grows with market orders, size, thin books and fast moves, and it counts toward your drawdown like any other loss.

Spot trading

Buying or selling the coin itself rather than a derivative. A few crypto prop firms offer spot pairs, usually without leverage or shorting.

Spread

The difference between the best bid and best ask. CFD-based firms add their own spread on top of the market; exchange-based firms pass the real book through.

Static drawdown

A maximum loss limit fixed at a set level below the starting balance that never moves. On a $10K account with a 10% static limit, the floor stays at $9,000 however much you make. Compare it with trailing on our trailing vs static drawdown page.

Stop-loss rule

A requirement to attach a stop-loss to every trade, sometimes within a set time of opening it. Missing it can void the trade or breach the account. See the stop-loss rule guide.

T

Trailing drawdown

A maximum loss floor that moves up as your equity or balance makes new highs. Some trailing limits lock at the starting balance once you are in profit; others never stop trailing. See trailing vs static drawdown.

Two-step challenge

An evaluation with two phases, usually an 8% to 10% target followed by a 5% target. It takes longer than a one-step but often allows more drawdown and costs less.

TradingView

A charting platform that some firms connect for order entry. It matters to traders who already keep their layouts and alerts there.

U

USDC

A dollar stablecoin issued by Circle and backed by cash and short-term US Treasuries. Firms such as Breakout and Propr pay out in USDC, so check which blockchain the payout uses before you share an address.

USDT

Tether, the most traded dollar stablecoin and the standard quote currency for crypto perpetuals. Most crypto prop firms list USDT pairs, and many pay out in USDT; confirm the network before you request a payout.

V

Volatility

How far and how fast price moves. Crypto can move 5% in an hour, so a stop that suits a quiet session can be far too tight on a busy one, and position size should shrink when volatility rises.

W

Weekend holding

Keeping positions open from Friday to Monday. Crypto trades all weekend, so most crypto-first firms allow it, while multi-asset firms sometimes close positions or ban holding on certain plans. See weekend holding.

Wick

A brief price spike shown as the thin line on a candle. Wicks trigger stops and drawdown breaches in seconds, which is why equity-based limits catch traders who thought their trade was safe.

Using this prop trading glossary

Rules with the same name can work differently from firm to firm. A "trailing drawdown" at one firm may lock at the starting balance, while at another it trails forever. Use these definitions to know what to look for, then read the firm's own terms and our reviews before you buy. For rule-by-rule detail, start with the daily drawdown and consistency rule guides.