An automatic process that closes open positions when risk limits are breached.
Auto liquidation prevents traders from exceeding loss limits. It is critical to understand at what point a firm will force-close positions.
A trader hits their $2,000 daily loss limit. The prop firm’s system automatically closes all positions to prevent further losses, locking them out for the day.
The number of phases a trader must complete to qualify for a funded account. Each phase typically includes meeting profit targets while adhering to risk rules.
The initial amount of capital allocated to a trading account in an evaluation or funded account.
The specific profit amount a trader must achieve to pass an evaluation or progress to a higher account level.
The maximum amount a trader is allowed to lose in a single trading day. Exceeding this limit typically disqualifies the trader. There are different types of loss limits, so it is important to understand the type that applies to a chosen plan.
The maximum permissible loss from the starting balance or peak balance. Breaching the drawdown limit ends the evaluation or funded account.