DEFINITION

Account Size

The initial capital allocated to a trading account. For prop firms, this is the evaluation account size (e.g., $50K, $100K). Profit targets, drawdown limits, and position sizing are all calculated relative to account size.

In depth

Account size determines every other metric in prop trading. A 5% daily drawdown on a $100K account is $5,000; on a $50K account it's $2,500. Position sizing must scale proportionally — risking 1% per trade means $1,000 max loss on the $100K and $500 on the $50K. Choosing the right account size is a discipline decision, not just a financial one: bigger accounts amplify both wins and losses, including the emotional impact.

Example

A trader buys a $100K FTMO Challenge for €540. Profit target: $10,000 (10%). Daily drawdown: $5,000 (5%). Max loss: $10,000 (10%).

Related terms

Drawdown

The peak-to-trough decline in equity, expressed as a percentage or dollar amount. Used to measure risk exposure and as the main failure criterion in prop firm evaluations.

Profit Target

The percentage or dollar profit required to pass a prop firm evaluation phase. Common targets: 10% for Phase 1, 5% for Phase 2.

Position Sizing

The process of determining how many units, lots, or contracts to trade based on account size, risk per trade, and stop loss distance. Proper position sizing is the foundation of risk management.

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