Glossary

The terminology used across PFArmour 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. PFArmour 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%).

PFArmour terms

Cycle — the lifecycle of a prop firm account arbitrated with PFArmour. 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.