Algorithmic & Prop Trading Glossary
Clear, math-backed definitions of quantitative risk metrics, MetaTrader algorithmic parameters, and prop firm evaluation rules.
Maximum Daily Drawdown
The maximum permissible equity or balance drop allowed within a single trading day, calculated either from the previous day's balance or equity high watermark.
Prop Firm Evaluation Challenge
A 1-step or 2-step simulated trading audition where traders must reach a profit target (8% to 10%) without breaching daily or total drawdown rules to manage funded capital.
Consistency Rule in Prop Trading
A prop firm risk mandate stipulating that no single trading day or position can account for more than a specific percentage (e.g. 30% to 50%) of total profits.
News Trading Restrictions
Prop firm rules restricting order execution within a window (usually 2 to 5 minutes) before and after high-impact economic news releases.
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