Trading under someone else's rules
A prop firm evaluation is a risk test with a profit target attached.
Translate the rules of a funded-account evaluation — profit target, daily loss limit, maximum drawdown, consistency rule — into the one unit that decides them: a number of losing trades. Work out how a trailing drawdown moves after a winning run, why an equity-based limit can end an attempt before any stop is reached, and how many consecutive losses a given risk per trade can absorb — before the first order is placed.
5 chapters · 5 quiz questions · 13 terms · included with a plan
Otus, on this module
Almost nobody fails an evaluation for lack of trades. They fail on one afternoon, against the loss limit, in a losing streak nobody had counted. The counting is plain arithmetic, and it belongs before the afternoon, not after it.
The chapters
Each module ends with you doing what it taught — a written answer Otus reads, and a quiz.
- 01 · Read
The rules are the test
Profit target, daily loss limit, maximum drawdown — and which of them actually ends attempts.
- 02 · Read
Count every limit in losing trades
Turn a percentage of the account into a number of R — and say the answer out loud.
- 03 · Read
A drawdown that follows the account up
Static versus trailing limits, and why profit buys less room than it seems.
- 04 · Read
Put the rules beside the record
The product does not track an evaluation. Here is how to keep the arithmetic honest anyway.
- 05 · Write
In your own words
Three sentences. Otus reads them.
- 06 · Quiz
Five questions on the rules
A wrong answer still pays. It costs the combo, not the XP.
13 terms this module defines
The same definitions Otus uses in the lessons. All of them are in the trading glossary.
- Prop firm
- A proprietary trading firm: a company that gives traders access to its capital, usually after they pass a paid evaluation, in exchange for a share of any gains.
- Evaluation
- The qualifying stage of a prop firm, also called a challenge: an account with a profit target and loss limits. Breaching a loss limit ends the attempt; missing the target only means it is not passed yet.
- Profit target
- The gain an evaluation account must reach to pass, usually quoted as a percentage of the starting balance. The rule people read first, and the one that decides the fewest failures.
- Daily loss limit
- The most an evaluation account may lose in one trading day before the attempt ends. Most useful known as a number of losing trades, with its reset time converted to local time.
- Maximum drawdown
- How far the account may fall below a reference level in total before the attempt ends. Static if the reference is fixed; trailing if it follows the account's highest point.
- Static drawdown
- A drawdown floor fixed at the start, such as 90,000 on a 100,000 account. Gains move the account away from it, so room grows as the account grows.
- Trailing drawdown
- A drawdown floor that rises with the account's high-water mark and never falls back. Gains lift the floor rather than buying room, so room is always measured from the latest high.
- High-water mark
- The highest value an account has reached so far. A trailing drawdown is measured from it, which is why a pullback from a new high can leave little room even while the account is up.
- Equity
- The account balance plus the current value of every open position. A limit measured on equity counts a losing open trade immediately; a limit on balance counts only closed trades.
- Consistency rule
- A rule that no single day may account for more than a set share of total profit. It filters out passes built on one oversized day, and can raise the total needed after a large win.
- Minimum trading days
- The number of separate days on which trades must be placed before an evaluation can pass. It delays a pass; it never ends an attempt.
- A limit in R
- A loss limit divided by the risk per trade: the number of losing trades the rules can absorb. The same 5% limit is ten losses at 0.5% per trade and two at 2%.
- Losing streak
- Consecutive losses, which cluster by chance. Even at a coin-flip hit rate, the longest run over a hundred trades is typically around six.
Finishing it pays 150 XP and 3 keys on the game board, on top of what each chapter earns. XP measures what you learned — never what you earned. How levels work.
Education only. Nothing here is a recommendation to buy or sell anything; the school teaches reading charts, never predictions.
Start with lesson one.
The first modules, Otus as your tutor and the game board are free. No card needed.