Futures and prop trading glossary.

Tick

The smallest price move a futures contract can make. On NQ, one tick is 0.25 points.

Tick value

What one tick is worth per contract, in dollars: $5 on NQ, $12.50 on ES.

Point value

What one full point is worth per contract: $20 on NQ, $50 on ES.

Micro contract

A contract one tenth the size of its E-mini: MNQ for NQ, MES for ES.

R multiple

A trade’s result divided by the risk you took. Risk $200 and make $400: +2R.

Expectancy

What a trade earns on average: win rate × average win − loss rate × average loss.

Profit factor

Gross profits divided by gross losses. Above 1, the strategy made money over the period.

Drawdown

The drop from a peak balance. In a prop account, the maximum drawdown is the loss limit that ends the account.

Trailing drawdown

A drawdown limit that rises with your highest balance and never moves down. Often it stops at the starting balance.

End-of-day drawdown

A trailing drawdown that only moves with your closing balance, not with open profit during the day.

Daily loss limit

The most you can lose in one day before the account is locked for the day, or fails.

Consistency rule

A limit on how much of your total profit can come from a single day.

Evaluation

The test phase of a prop firm: reach a profit target without breaking the rules.

Funded account

The account you get after passing an evaluation, with its own rules and payouts.

Payout

A withdrawal of profits from a funded account, subject to the firm’s conditions.

Safety net (cushion)

A balance you must keep above the starting balance before some firms allow a payout.

Reset

Paying to restart an evaluation after breaking a rule.

Slippage

The difference between the price you expected and the price you got.

MAE / MFE

Maximum adverse and maximum favorable excursion: how far a trade went against you, and in your favor, before it closed.

RTH and ETH

Regular trading hours (9:30 a.m. to 4:00 p.m. New York time for index futures) and extended hours (the rest of the Globex session).

Globex

CME’s electronic trading platform, open nearly 23 hours a day from Sunday evening to Friday.

Rollover

Moving from the expiring contract month to the next one, usually about a week before expiration for index futures.

Copy trading

Placing the same trade on several accounts at once. In Sweep, a copied trade shows once with the total.

Trading journal

A record of every trade with its reason, its result and what you learned, used to find your edge and fix your mistakes.

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