DEFINITION
Breach
Violating a prop firm rule — typically hitting the daily drawdown or maximum loss limit. A breach fails the challenge or funded account immediately and cannot be reversed.
Example
Your $100K FTMO account starts the day at $102,000. You lose $5,100 in one trade — that's a daily drawdown breach because losses exceeded 5% of starting equity. The account is failed instantly.
Related terms
Daily Drawdown
The maximum percentage loss allowed in a single trading day. Calculated from the balance (or equity) at the start of the day. Breaching this limit at any point during the session fails the account immediately.
Max Loss
The total percentage loss allowed over the lifetime of a prop firm account. Typically 6–10%. Breaching the max loss at any point fails the account permanently.
Prop Firm
A proprietary trading firm that funds retail traders after they pass an evaluation. Traders pay an evaluation fee and receive a funded account with profit splits after demonstrating consistent profitability.
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