Glossary

Prop firm rules and backtest metrics

Last reviewed: 25 September 2026·Tradelyze

Prop firm rules are the pass-or-fail limits of a funded-account challenge, and a few backtest numbers predict whether a strategy will break them. Three matter most: the worst single-day loss, the deepest dip within a day including open trades, and the best day's share of profit. Overall drawdown and win rate predict far less.

Tradelyze rebuilds its drawdown figures from closed trades. A dip inside a trade that recovered before the exit never shows, so treat each one as a floor on the real dip.

New to prop firm challenges? Start with how prop firm challenges work. New to drawdown? Start with maximum drawdown.

What rule types do prop firms use, and what does each measure?

Prop firms build challenge rules from five kinds of limit. They are a daily loss limit, a maximum drawdown, a consistency rule, a minimum number of trading days and a profit target. A drawdown is a fall in the account from an earlier high point. The maximum drawdown rule comes in three variants. Firms differ on the thresholds and on the stage each rule applies to. The kinds of rule change far more slowly than the numbers, so learn them first.

Several of these rules are measured on equity: the account balance plus the profit or loss on trades that are still open.

The "Fails you outright?" column matters more than it looks. A daily loss limit or maximum drawdown breach ends the account at once. The other rules only postpone the outcome. A strategy that trips a consistency rule has a problem worth fixing. A strategy that trips a trailing drawdown floor has already lost the account fee.

How is a prop firm daily loss limit measured?

A prop firm daily loss limit is usually measured against the starting balance. The dollar allowance is a fixed share of the account size you bought. It does not grow when the account grows. The tempting assumption is the opposite: that a 5% limit on an account grown to $125,000 gives you $6,250 of room. At FTMO, for example, it does not.

FTMO's trading objectives, retrieved 16 September 2026, set the 2-Step Challenge Maximum Daily Loss at 5% of the Initial Simulated Capital. That is the starting account size, not the current balance. On a $100,000 account the allowance is $5,000, and it stays $5,000 after a profitable month.

FTMO's 1-Step Challenge uses 3% instead. FTMO announced it on 6 February 2026 and sells it alongside the 2-Step, not in place of it. So "FTMO's daily limit is 5%" is true of only one of FTMO's two challenges.

What resets each day is the level, not the size. FTMO recalculates the Maximum Daily Loss Limit at 00:00 CE(S)T, which is Central European (Summer) Time. The new level is the account balance at that moment minus the fixed allowance. The reset reads the balance, not the equity. So a position still open at midnight does not move the level, even though the rule is enforced against equity all day.

Here is the arithmetic on the FTMO 2-Step Challenge. A $100,000 account carries a $5,000 daily allowance. Suppose the account grows 10% and closes the day flat at $110,000. The next day's limit level is $110,000 − $5,000 = $105,000. A trader who assumed the allowance scaled with the account budgets 5% of $110,000, or $5,500. The real allowance is still $5,000.

The gap widens the longer the account keeps growing. It grows furthest on the FTMO Account, the funded stage, because FTMO sets no Profit Target there and nothing caps the balance. At $125,000, a trader who scales the percentage budgets $6,250 but has $5,000. That is 20% less room than budgeted, enough to end an account on a normal losing day.

How a daily loss limit is measured

Does touching the daily loss limit fail the evaluation, even intraday?

Usually yes. A prop firm loss limit is checked during the trading session, not only at the close. The amount watched includes the profit or loss on positions that are still open. The exact wording differs between firms. Quote it rather than paraphrase it, because "touched" and "breached" are not the same test.

FTMO's trading objectives, retrieved 16 September 2026, set a limit below which equity cannot drop. In FTMO's words, "If the equity drops below this limit, the rule is considered violated." Equity there is the balance plus open-position profit and loss and swaps, minus commissions. It is not the realized balance.

Topstep words its Trading Combine parameters the other way. Its help center, retrieved 16 September 2026, says not to let the account balance hit or go below the Maximum Loss Limit. Topstep counts both realized and unrealized profit and loss toward that limit.

That one detail changes what risk management has to do. If the test were on the closing balance, flattening everything after a large loss would be enough. The test is on live equity, so the breach is recorded during the session. Anything done afterwards is irrelevant, including the flattening itself.

The same reasoning applies to a maximum drawdown rule, with one difference. A daily loss limit resets the next day. A maximum drawdown breach does not reset at all.

How does a trailing drawdown work?

A trailing drawdown is a loss limit that follows the account up. Its floor sits a fixed distance below the highest balance the account has reached. So it limits how much profit you may give back, not only how much you may lose. For the general difference between limit types, see static versus trailing drawdown.

How trailing drawdown moves

The mechanic has three parts:

1. The floor sits at the highest balance reached, minus the drawdown allowance. At account opening, the highest balance is the starting balance. So the floor starts one full allowance below it.
2. The floor trails upward with every new peak and never falls back. Make money and the floor follows you up dollar for dollar. Lose money and the floor stays where the last peak put it.
3. In some programs the floor stops rising once it reaches the starting balance. Topstep's Maximum Loss Limit locks there, per Topstep's help center, retrieved 16 September 2026. Whether a given program does this, and at which stage, is firm-specific.

Point two is where accounts die. The floor ratchets up, but the account can fall. A give-back equal to the full allowance disqualifies you, even when the account is still near or above its starting balance. The rule does not care that you are up on the month. It cares only about the distance from your best moment to your current one.

Is real-time trailing or end-of-day trailing harsher?

Real-time trailing is the harsher of the two. The two variants are not close substitutes. Mixing them up misjudges how hard an evaluation is by a wide margin.

Real-time trailing updates the peak at any moment in the session. An unrealized profit reached at 10:30 raises the floor at 10:30, permanently. That holds even if the position is closed flat an hour later. Under this rule, a trade that runs deep into profit and reverses to breakeven has cost you real room.

End-of-day trailing updates the peak only at settlement. Intraday swings never move the floor. The same trade that runs to profit and back to breakeven costs nothing.

How often the floor moves and how often it is enforced are separate questions. Topstep's help center, retrieved 16 September 2026, describes its Maximum Loss Limit as a trailing limit that rises as the end-of-day balance grows. It never moves down, and it locks permanently once it reaches the starting balance. The same article says the limit updates at the end of each trading day but is monitored in real time throughout the session.

Both statements hold at once: the floor moves once a day, and it is enforced all the time. Topstep runs that mechanism on the Trading Combine and on the Express Funded Account. The two differ in where the account and its limit start, not in how the limit trails. So an end-of-day trailing program is not a program that only checks you at the close.

FTMO sells both drawdown types side by side, which shows how much the type matters on its own. Its trading objectives, retrieved 16 September 2026, put the Maximum Loss at 10% of the Initial Simulated Capital on both challenges. On the 2-Step Challenge that 10% is a static limit measured from the initial capital. On the 1-Step Challenge it is an end-of-day trailing limit. In FTMO's words, that limit "can only increase, but never decrease" — with one exception FTMO states on the same page: it "fully resets" to 90% of the Initial Simulated Capital when a Reward is withdrawn and a new FTMO Account is provided. Same firm, same headline percentage, two very different rules.

What does a consistency rule's best-day cap really do?

A consistency rule caps the share of total profit that one trading day may make up. With a 30% cap, a $3,000 best day needs at least $10,000 of total profit before that day complies. Going over usually delays a pass or a payout rather than ending the account, but the extra trading days add drawdown risk.

How the prop firm consistency rule works

Topstep and Apex Trader Funding word their figures in ways that need a careful read. That detail is under Going deeper, in why the consistency figures need a careful read.

Which backtest statistic predicts which prop rule?

Each prop firm rule is predicted by one specific backtest statistic. In most cases it is not the statistic a backtest report leads with. Win rate, for instance, says little about any of these rules on its own. Win rate and expectancy explains why a high win rate can hide large losses.

The sizing row is the one worth dwelling on. Every drawdown limit in an evaluation is a fixed dollar figure. The strategy's losses grow in proportion to position size. So size is the one setting that moves every rule at once, yet traders often adjust it last. To turn a dollar limit into a number of contracts, see position sizing for prop firm challenges.

These statistics describe the one historical order in which your trades happened. To see how the same trades fare in other orders, resample them. Monte Carlo simulation for prop firm challenges shows how.

Why does a backtest under-report breach risk?

A backtest that reports only close-to-close drawdown under-reports prop firm breach risk. Trailing drawdown and daily loss limits are judged on intraday equity, including open positions. Close-to-close drawdown looks at the account only at each day's close. The two can differ by an order of magnitude on the same day.

The failure case is specific and common. A strategy closes every day near flat but goes deeply underwater during the session. On a close-to-close basis, its worst day is a rounding error. On intraday equity, its worst day uses most of a daily allowance. The naive backtest passes. The real evaluation does not.

There is a second, subtler layer, and it affects trade-level backtests. You can rebuild intraday equity by walking a day's closed trades in exit order. That captures more than a close-to-close figure, but it still cannot see inside a position. A trade that goes deep against you and recovers before the exit adds nothing to the rebuilt curve. The firm's risk engine values open positions at the current price, so it sees the whole dip.

That rebuilt curve is a lower bound only if trades are replayed in the order they closed. A tool that sorts trades by anything else reports a different day's path. Depending on the sort, it can show a deeper trough than the day ever reached. Tradelyze replays trades in the order they closed. Its drawdown figures are therefore this kind of lower bound: they cannot see how far a trade moved against you before it closed.

Why can a profitable strategy still fail through sequence risk?

Sequence risk is the chance that the order of your wins and losses decides whether you pass, rather than the strategy's edge. A strategy can have positive expectancy, meaning a positive average profit per trade. It can be correctly sized and respect every rule on average. It can still fail, because the order of losses decides whether you hit the floor before the target.

Expectancy is an average over the whole trade set. An evaluation is one path through those trades, with a floor that ends the account the moment it is touched. If the losing trades cluster in the first two weeks, the account closes. The remaining edge never gets the chance to appear. The same trades in a different order pass comfortably. Nothing about the strategy changed; only the sequence did.

This is the quantity a Monte Carlo simulation estimates. It resamples the trade sequence into many alternative orders and runs each one against the rules. You get a spread of outcomes instead of one path. The number that matters becomes the share of orders that reached the target without a breach.

Position size has the most effect on that share. The mechanism is not in dispute. Smaller size does not change the edge. It changes how many losses in a row the account can absorb before it touches the floor.

This page quotes no figure for the size of that effect, because no primary source for one was found. The numbers in circulation trace back to individual unpublished simulations. Measure it on your own trade set instead, using step four of how to estimate your odds of passing.

What does Tradelyze check against prop firm rules?

Tradelyze checks each rule set you pick, from its 17 firm presets or your own custom rules. Every selected firm is scored by the same evaluation, on the same optimization trials. Each firm gets its own card.

Each card shows a Qualifies or Not Feasible badge and a Rule Results table. The table compares each limit with the value your backtest reached. Tradelyze does not evaluate a firm's time limit, news-trading or weekend-holding rules.

The six rules, each checked only when the rule set defines it:

• Maximum daily drawdown: the worst fall within one day, as a share of the starting account size by default.
• Maximum total drawdown: always checked, using the rule set's drawdown type. A zero limit allows no drawdown.
• Profit target: the backtest's total return against the target.
• Minimum trading days: days on which at least one trade closed.
• Consistency: the best single day's profit divided by total profit across all days, the formula Topstep's help center prints. On a run with no net profit, the row is marked not evaluated. There is no profit for a day to be a share of.
• Minimum trade count: total trades, a separate test from trading days.

Each drawdown figure is a share of the starting account size. So a trailing limit is a fixed dollar distance below the high point:

Trailing Realtime follows closed trades, not live equity. An open trade's paper profit never raises the Tradelyze floor. A loss inside an open trade never counts against it. Against a firm that trails on live equity, treat a narrow pass as unproven.

What do Qualifies and Not Feasible mean?

Each selected firm gets its own card, scored on the settings Tradelyze recommends for that firm. The badge reads Qualifies only when every rule that was checked passed, and Not Feasible when any one failed. The Rule Results table lists each rule with its limit, the value the backtest actually reached, and a short message. The first failing row is the one to work on.

If nothing failed but a rule could not be checked, the card shows no badge.

In Top Trials, the Feasible column reads YES when every rule was checked and passed for that trial. It reads NO otherwise, including when a rule could not be checked.

How do I read the Rule Results table?

The Rule Results table has one row per rule, with a Status mark, the Rule, the Actual value, the Limit and a Message. Actual is the value your backtest reached. A green tick means the rule passed, a red cross means it failed, and a dash means it was not decided.

The total drawdown row names its drawdown type. If a drawdown row fails first, test a smaller position size before changing the strategy. Limits are fixed amounts, while losses grow with size.

How do I estimate my odds of passing before paying the fee?

You cannot compute a true probability of passing, and anyone offering one is overstating the data. What you can do is bound the question well enough to decide. The method has four steps and one large caveat.

1. Get the rule set exactly right. Read the daily loss limit, the maximum drawdown and its type, the consistency figure and the minimum trading days off the firm's terms. Use the current terms for the exact account size you plan to buy. Check the evaluation time limit yourself, because Tradelyze does not check it. A wrong drawdown type invalidates everything that follows.
2. Measure the four predictive statistics on your own trade log. They are the worst single-day loss, the maximum intraday equity drawdown, the best-day share of profit and trades per week or month. Compare each against its rule. If one fails on the historical path, the probability question is moot. The strategy has already failed once, on the one sequence you know.
3. Resample the sequence. Run many alternative orders of the trade set through the rules. Count the share that reach the profit target without breaching anything. That share is the estimate. Tradelyze's robustness card reports a related figure for the drawdown rule alone, Ruin Probability. It is measured against the rule set's total drawdown limit. Risk of ruin explains what that figure can and cannot tell you.
4. Vary position size and re-run. Size moves every rule at once. So the survival share across several sizes tells you more than the share at your current size.

The honest summary: this method is good at telling you a strategy is not ready. It is much weaker at telling you it is. A strategy whose survival share collapses under resampling, or when you nudge size, has told you something real. A strategy that survives everything has told you only that you have not yet found what kills it.

Why do Topstep's and Apex's consistency figures need a careful read?

Consistency figures are among the most often revised terms at the firms quoted on this page. On 28 July 2026, Topstep's consistency article gave a 50% figure for the Trading Combine; by 16 September 2026 it gave 55%. Apex Trader Funding runs two figures at once, and the stage a figure applies at changes what breaking it costs.

How does Topstep word its consistency figures?

Topstep's help center, retrieved 16 September 2026, headlines a Trading Combine Consistency Target of 55%. The rule reads: "Your single best day of profit must stay at or below 55% of your Profit Target." The same article prints the formula as best day profit divided by total profit, worked as a $1,600 best day over $3,000 of total profit, or 53%. At the moment you exactly reach the Profit Target, the two denominators give the same number. Once total profit passes the target, they differ.

The article does not yet agree with itself. Its section on how the best day locks in still prints "Best Day ÷ 0.50 = Total Profit Needed", worked as a $1,800 best day giving a $3,600 Profit Target on a $50K account. That formula uses 50%, not 55%. The same article says the old buffer "was quiet padding on top of a 50% target", and that 55% has no buffer and is not rounded. Topstep's separate Trading Combine Parameters article, retrieved the same day, says the best day "should stay below 55%" of the Profit Target, which reads as exclusive. Until the wording settles, check your numbers against Topstep's own worked examples, or ask Topstep which formula applies to your account.

Topstep's Express Funded Account uses a different figure again. Traders choose a Standard or a Consistency payout path when they activate the account. On the Consistency path, the Consistency % is the largest single-day net profit divided by total net profit. Topstep's help center, retrieved 16 September 2026, says it "must be 40% or below to be Payout eligible", with no rounding. It gates payouts, not passing.

Why does Apex Trader Funding have two consistency figures?

Apex Trader Funding's help center, retrieved 16 September 2026, carries a 50% Consistency Requirement and, separately, a Legacy 30% Consistency Rule — Windfall; the word "legacy" is Apex's. Apex's Legacy Products Overview, retrieved the same day, says legacy accounts purchased prior to 1 March 2026 "will not be affected" and keep their prior rules. Two accounts at the same firm can therefore carry different consistency figures. Purchase date decides which, not anything about the trading.

The direction of that change is worth stating, because a rule revision reads like a tightening and this one is not. Going from 30% to 50% is looser. Apex's legacy formula divides the highest profit day by 0.3, so a $1,500 best day needs $5,000 of total profit. The current requirement divides by 0.5, so the same day needs $3,000.

Apex words both figures as tests applied when you request a payout. Apex's page on legacy account consistency rules, retrieved 16 September 2026, says Evaluation Accounts have "no consistency rules during this phase". That page covers legacy accounts; this page did not confirm the evaluation rules for accounts bought on or after 1 March 2026.

The boundary needs care too. Apex's 50% page says the best day must be "less than 50%" of net profit, and that "No single day can make up 50% or more". Yet the same page's example table marks a best day of exactly 50% as "Consistency Met". Topstep has the same kind of mismatch between its two articles. Check the preposition and the firm's own worked examples, not just the number.

Stage 4 · step 16 of 18. Next in the learning path: Trailing drawdown

Frequently asked questions about prop firm rules

Sources

Every firm-specific figure on this page comes from the firm's own published documentation, linked in this list. The FTMO, Topstep and Apex Trader Funding pages were all retrieved on 16 September 2026. Claims that could only be traced to secondary summaries or to community posts were removed rather than cited.

• FTMO, Trading Objectives, ftmo.com/en/trading-objectives, retrieved 16 September 2026 (first reviewed 28 July 2026) — the 2-Step Challenge Maximum Daily Loss of 5% of Initial Simulated Capital and the 1-Step's 3%; the 10% Maximum Loss, static on the 2-Step and end-of-day trailing on the 1-Step, where "The limit can only increase, but never decrease" except that it "fully resets, returning the first-day limit to 90% of the Initial Simulated Capital" when a Reward is withdrawn and a new FTMO Account is provided; the Maximum Daily Loss Limit recalculated at 00:00 CE(S)T from the account balance at that time; the violation wording, "If the equity drops below this limit, the rule is considered violated", with equity counting open-position profit and loss, swaps and commissions; and "There is no Profit Target on the subsequent FTMO Account".
• FTMO, Introducing the 1-Step FTMO Challenge, ftmo.com blog, published 6 February 2026, retrieved 16 September 2026 — the 1-Step product's 3% Maximum Daily Loss and end-of-day trailing 10% Maximum Loss, and its sale alongside the "classic two-phase version (now referred to as the 2-Step FTMO Challenge)" rather than as a replacement for it.
• Topstep, What is the Maximum Loss Limit?, help.topstep.com article 8284204, retrieved 16 September 2026 (first reviewed 28 July 2026) — "It rises as your end-of-day balance grows, but never moves down. Once it reaches your starting balance, it locks permanently." and "The MLL updates at the end of each trading day but is monitored in real time throughout the session." The article documents the same mechanism for the Trading Combine and the Express Funded Account, and says "Both realized and unrealized P&L count toward it."
• Topstep, Trading Combine Parameters, help.topstep.com article 8284197, retrieved 16 September 2026 (page modified 10 September 2026; first reviewed 28 July 2026) — "Do not let your account balance hit or go below the Maximum Loss Limit (MLL)", and that "your best single day should stay below 55% of your Profit Target".
• Topstep, Consistency at Topstep, help.topstep.com article 8284208, Topstep help center, retrieved 16 September 2026 (marked "Updated today"; page modified 14 September 2026) — in the Trading Combine, "Your single best day of profit must stay at or below 55% of your Profit Target. If it exceeds that, your Profit Target increases. You'll need to earn more to pass."; the printed formula "Best Day Profit ÷ Total Profit = Best Day %", worked as "$1,600 best day ÷ $3,000 total profit = 53%"; "55% is a hard line. It is not rounded, and there is no buffer."; a later section that still prints "Best Day ÷ 0.50 = Total Profit Needed"; and, for the Express Funded Account, "Largest Single-Day Net Profit ÷ Total Net Profit = Consistency %" and "Your Consistency % must be 40% or below to be Payout eligible." When first reviewed on 28 July 2026, the article gave a 50% Trading Combine figure. The address ending what-is-the-consistency-target redirected (HTTP 301) to this URL on 16 September 2026.
• Apex Trader Funding, 50% Consistency Requirement, apextraderfunding.com help center, retrieved 16 September 2026 (page modified 24 April 2026; first reviewed 28 July 2026) — "Your largest profitable trading day must represent less than 50% of your net profit since your last payout request, or since account inception if no payout has been made."; "No single day can make up 50% or more of your overall profit."; "Do I fail if I am above 50% consistency? No, being above the 50% consistency does not fail your account. However, the payout request option will just not be available until the consistency percentage falls below 50%"; the formula "Highest Profit Day / 0.5 = Minimum net profit required", worked as $1,500 / 0.5 = $3,000; and an example table whose final row, $1,000 against $2,000 of total profit, is marked "Consistency Met" at exactly 50%.
• Apex Trader Funding, Legacy 30% Consistency Rule — Windfall, apextraderfunding.com help center, retrieved 16 September 2026 (page modified 15 April 2026; first reviewed 28 July 2026) — "no single trading day accounts for more than 30% of the total profit balance at the time of a payout request"; the rule "applies until the sixth payout or until the account is transferred to a Live Prop Trading Account"; and the formula "Highest Profit Day ÷ 0.3 = Minimum Total Profit Required", worked as $1,500 ÷ 0.3 = $5,000. On 28 July 2026, Apex's older support.apextraderfunding.com article URL redirected here.
• Apex Trader Funding, What are the Consistency Rules for Legacy PA and Funded Accounts?, apextraderfunding.com help center, retrieved 16 September 2026 — on Evaluation Accounts, "There are no consistency rules during this phase, which is focused on meeting profit goals and overcoming the Trailing Drawdown."
• Apex Trader Funding, Legacy Products Overview, apextraderfunding.com help center, retrieved 16 September 2026 — "Legacy accounts purchased prior to March 1st, 2026, will not be affected. These accounts can be traded as normal under their respective prior Legacy rules." This is Apex's own statement of the cutoff date.
• Tradelyze implementation, reviewed 15 September 2026 — the prop firm checks behind each firm card's Qualifies or Not Feasible badge, its Rule Results table and the Top Trials Feasible column: the six rules checked, the four drawdown types, the consistency definition, and the rules that are not checked (evaluation time limit, news trading, weekend holding). The Topstep presets carry a 50% consistency figure, measured against total profit.