Glossary

The terminology used across Prop Firm Armour and prop firm trading, defined precisely. Where a term has a dedicated page, it is linked.

Prop firm terms

Account size: the virtual balance of the prop firm challenge account.
Prop cost: the price paid for the challenge account, in US dollars.
1-step / 2-step / 3-step challenge: a prop account with one, two or three evaluation phases before the live phase.
Profit target: the performance, in percentage of the account size, required to pass a challenge phase.
Drawdown limit: the maximum loss allowed on the account, in percentage of the account size, in challenge and live phases.
Live phase: the funded stage after all evaluation phases, on which payouts are generated.
Payout: the payment the prop firm makes on your live phase performance.
Profit split: the percentage of performance the firm pays you at payout. Prop Firm Armour uses the split at the first payout.
Refund: the amount the firm returns with your first payout; 0 if the firm does not refund its fee.
Bonus amount: any extra reward the firm pays on performance; 0 if none.
Bonus threshold: the live phase performance after which the bonus is paid (e.g. for a $1,000 bonus after 10% on the live phase, the threshold is 10%).

Prop Firm Armour terms

Cycle: the lifecycle of a prop firm account arbitrated with Prop Firm Armour. See Cycles.
Active cycle / closed cycle: a cycle currently running / a completed cycle. Closed cycles aggregate into your P&L.
Cycle mode: Margin or Scaling; what the cycle optimises for. See Margin vs Scaling.
Live phase target: your target performance, in percentage of the account size, on the live phase. All expected P&L projections and the required broker deposit depend on it.
Risk adjustment: a slider that sets the intensity of the hedging, affecting the expected P&L projections and the required broker deposit.
Master: the prop firm account. Slave: your brokerage account.
Hedge (asymmetric): the counter-position Armour opens on the broker account with a different, variable lot size, calculated to cover the monetary risk of the prop account failing.
Broker deposit: the capital the brokerage account needs for the cycle to finish. The broker account should grow as the prop account loses, and vice versa.
Phase deposits: the broker deposit split across phases, so it can be funded in steps as the prop account advances.
Net Payout Projection: expected net outcome when the live phase target is reached and the payout arrives; includes broker P&L, refunds and bonuses.
Projected Broker Profit: expected net outcome when the maximum drawdown limit is reached; includes the challenge fee and broker P&L.
Master balance timeline: the prop account balance chart, recalculated at every trade closure.
Assets: total broker capital plus the fees of active prop accounts.
In-use capital: the share of assets deployed in active cycles.

Erosion terms

Erosion: the totality of friction costs of your trading, paid on both accounts. The difference between the actual and expected outcome of a broker trade. See Erosion.
Global erosion: cumulative trade erosion across all cycles.
Erosion average: average erosion per trade; as a percentage it is calculated on 1% of the prop account size.
Acceptable average: an input that greys trades between 0 and the set value, so exceptional erosion stands out.
Commission (master / slave): the per-trade fee charged by the prop firm / by your broker.
Swap (master / slave): the overnight financing fee on positions held past the session close; occasionally positive on some instruments.
Spread: the difference between bid and ask price, paid on every transaction.
Slippage: the difference between the expected and the actual execution price.
Latency: the delay between the prop trade and its broker counterpart being executed.
Rounding: erosion from rounding lot sizes when trades are copied to the broker account.
Equaliser: erosion from exceeding targets or drawdowns on the prop account (e.g. closing at +9% on a +8% target).
Fail-to-Copy: erosion from trades not copied to the broker account.

Trading terms

Lot size: the volume of a position. On the broker account it is set asymmetrically by Armour, not mirrored from the prop trade.
Margin call: the forced closure of positions when the broker account runs out of free margin. On the broker leg it must be avoided: a broker-side closure does not close the prop counterpart, and the outcome of the delay is random.
P&L: profit and loss.
Equity: balance plus the floating result of open positions.