Prop Firm Rules & Violations Encyclopedia
Over 80% of evaluation failures stem from technical contract breaches rather than lack of market edge. Master every critical rule—from 30-day inactivity purges to minimum trade durations and midnight server resets.
Prop Trading Rules & Violations Encyclopedia (8)
30-Day Account Inactivity Rule
Immediate Account TerminationTime & InactivityIf no trade is placed on an evaluation or funded account for 30 consecutive days (or 14 days on some firms), the account is permanently expired and deleted from server databases.
Minimum Trade Duration (Tick Scalping Ban)
Profits Cancelled / Soft BreachExecution & StrategiesTrades must remain open for a minimum duration (typically 30 seconds to 2 minutes). Closing positions within 5 or 10 seconds is flagged as toxic tick scalping or latency exploitation.
Mandatory Stop Loss Placement
Immediate Account TerminationRisk & DrawdownEvery position must have a hard stop loss placed within a strict window (e.g. within 2 minutes of trade open or immediately with market order execution).
IP Address & VPN Geolocation Discrepancy
Immediate Account TerminationAccount IntegrityLogging into an account from multiple countries within hours or using public commercial VPN proxies is flagged as unauthorized account management or pass-service fraud.
Daily Drawdown Server Midnight Reset
Immediate Account TerminationRisk & DrawdownDaily loss limits are calculated against equity or balance at server midnight (typically CE(S)T 00:00 or UTC 00:00), NOT a rolling 24-hour window.
Weekend & Market Close Holding Ban
Profits Cancelled / Soft BreachTime & InactivityAll positions must be closed before the weekend market close (Friday 5:00 PM EST for Forex, 3:10 PM CST for Futures) to prevent gap risk over the weekend.
Profit Consistency Cap (30% / 50% Rule)
Profits Cancelled / Soft BreachRisk & DrawdownNo single trading day can account for more than 30%, 40%, or 50% of your total requested profit. Prevents 'one-trade gambling' passes.
Reverse Hedging & Cross-Account Arbitrage
Immediate Account TerminationExecution & StrategiesOpening opposing buy and sell positions across two accounts or exploiting latency price lag between slow brokers and fast institutional feeds.
Hard Breaches vs Soft Breaches: What Every Funded Trader Must Know
Understanding how prop risk desks classify violations and when an infraction leads to immediate account termination versus a trade adjustment.
Hard Breach: Irreversible
Hard breaches (e.g., hitting daily loss limit, exceeding overall trailing drawdown, or reverse copy trading) result in permanent account termination. Server API credentials are wiped instantly and all simulated profits are forfeited.
Soft Breach: Position Liquidated
Soft breaches (e.g., forgetting to close a trade before Friday market close on a swing-restricted account, or opening an order during news on FTMO) automatically close the offending trade or void the profits made on that specific ticket, but leave the funded account intact.
Payout Review Audits
Many rules (such as consistency profit caps or minimum trade duration) are not enforced in real-time. Instead, they are flagged during formal payout audits when risk teams inspect trade history before authorizing withdrawals.
Frequently Asked Questions on Prop Firm Rules
What is the difference between a Hard Breach and a Soft Breach?
A Hard Breach (such as exceeding the maximum daily loss limit or overall trailing drawdown) immediately terminates the account, requiring you to repurchase an evaluation. A Soft Breach (such as forgetting to close a trade before weekend or trading during news on certain firms) automatically closes the offending trade or voids the profit, but keeps the funded account active.
Can I appeal a prop firm rule breach if my internet disconnected?
Generally no. Prop firm terms of service explicitly state that traders are solely responsible for their internet connection, electricity, and terminal stability. Having emergency mobile MT5/cTrader apps with cellular data ready is recommended for unexpected ISP outages.
Why do prop firms ban grid and martingale trading?
Martingale involves doubling position sizes on losing trades, creating an exponentially steep risk of ruin that inevitably causes a complete account blowout. Prop firms managing real capital risk cannot allow strategies that risk 100% of liquidation cushion on a single runaway trend.