Funded Trading Account Rules Checklist (Complete PDF)

Breaking into proprietary trading can feel like navigating a maze blindfolded. You've got the skills, the strategy, and the hunger to trade with real capital—but one wrong move, one overlooked rule, and your funded account can disappear faster than a flash crash. That's why having a comprehensive funded trading account rules checklist isn't just helpful; it's essential for survival and success in the prop trading world. Whether you're eyeing your first evaluation or you've already blown an account (we've all been there), understanding these rules inside and out will be the difference between consistent payouts and costly restarts.

The reality is that most traders fail their funded accounts not because they lack trading ability, but because they violate rules they didn't fully understand. Prop firms like TradersYard have specific parameters in place to protect both the firm's capital and encourage disciplined trading. These aren't arbitrary hoops to jump through—they're the framework that separates gamblers from professional traders. In this comprehensive guide, we'll walk through every critical rule, requirement, and restriction you need to know before you risk a single dollar of firm capital.

Understanding the Foundation: What Makes Funded Account Rules Different

Before diving into the specific checklist items, it's crucial to understand why funded trading account rules exist in the first place. Unlike trading your personal capital where you answer only to yourself, prop firm rules create a standardized evaluation environment. These parameters ensure that traders demonstrate not just profitability, but sustainable, risk-managed profitability that can scale over time.

The psychology here matters tremendously. When trading your own money, you might stomach a 30% drawdown if you believe in your analysis. Prop firms can't operate that way because they're managing dozens or hundreds of traders simultaneously. According to Investopedia's research on risk management, professional trading institutions typically limit individual trader risk to protect overall portfolio stability. This same principle applies to funded accounts, where rules act as guardrails to prevent catastrophic losses.

Think of these rules as the qualification standards for a pilot's license. You wouldn't want airlines to let pilots fly commercial jets without proving they can handle turbulence, emergencies, and standard procedures. Similarly, prop firms need evidence that you can trade profitably within defined risk parameters before trusting you with significant capital. The traders who thrive are those who view rules not as restrictions but as the professional standards of the industry.

1. Maximum Daily Loss Limits: Your Non-Negotiable Safety Net

The maximum daily loss limit stands as perhaps the most critical rule in any funded trading account rules checklist, and it's where more traders fail than any other single violation. This rule sets a hard cap on how much your account can lose in a single trading day, typically ranging from 3% to 5% of your starting balance depending on the firm and challenge type.

Here's where traders get tripped up: the daily loss calculation isn't just about closed trades. Most prop firms calculate daily loss based on your account's lowest point during the day, including open positions. Let's say you start the day with a $100,000 account and a 5% daily loss limit ($5,000). If you open a position that shows a $4,000 unrealized loss at its worst point—even if you later close it for only a $1,000 realized loss—you've already used $4,000 of your daily allowance at that moment. This real-time calculation catches many traders off guard, especially those who hold losing positions hoping for reversals.

The smart approach involves treating your daily loss limit as a percentage you never want to approach, let alone hit. Professional traders at firms like TradersYard typically stop trading for the day if they hit 50-60% of their daily loss limit. This discipline prevents emotional trading and the dangerous "I need to make it back today" mindset that leads to account violations. Additionally, understanding when your daily loss resets (usually midnight server time, not your local timezone) prevents accidental violations when trading evening or overnight sessions.

Pro Tip: Set your own internal daily loss limit at 60-70% of the firm's maximum. This buffer zone gives you breathing room and prevents approaching the actual threshold during volatile market conditions.

2. Maximum Overall Drawdown: The Account Lifecycle Limit

While daily loss limits protect you from single-day disasters, the maximum overall drawdown rule governs your account's entire lifecycle. This represents the maximum your account balance can fall from its starting point (or highest point, depending on the firm's structure) before you violate the rules and lose access to the funded account.

Most prop firms structure this as either a trailing drawdown or a static drawdown. A static drawdown measures your account value against your starting balance—if you begin with $100,000 and have a 10% maximum drawdown, your account can never drop below $90,000, period. A trailing drawdown is more forgiving but complex: once your account grows, the drawdown threshold moves up with your profits. Using the same example, if you grow the account to $110,000, your trailing drawdown threshold becomes $100,000 (the new high minus 10%), effectively locking in your profit.

The mathematics here demand careful position sizing and risk management. If you're working with a 10% maximum drawdown and you take trades risking 2% per position, you theoretically have five consecutive losing trades before violation. But in practice, slippage, overnight gaps, and compounding effects mean you should plan for no more than three to four losing trades before seriously reassessing your strategy. Successful funded traders track their drawdown percentage after every trade, maintaining detailed records that most retail traders ignore. At TradersYard, we emphasize this tracking as part of developing professional trading habits that extend beyond just the evaluation phase.

3. Minimum Trading Days: Proving Consistency Over Lucky Streaks

Here's a rule that separates genuine trading skill from random luck: the minimum trading days requirement. Most prop firms require you to trade on a specified minimum number of separate days before you can pass an evaluation or request a payout. This typically ranges from 3 to 10 trading days, depending on the challenge structure and profit targets.

The reasoning behind this rule reflects statistical reality. Anyone can get lucky with one or two high-probability setups that work out perfectly. But consistent profitability across multiple trading sessions, different market conditions, and various timeframes demonstrates actual skill and strategy edge. According to research published by financial market analysts, short-term trading luck tends to regress toward mean performance over time, making extended evaluation periods crucial for identifying skilled traders.

This rule also prevents "lottery ticket" trading strategies where someone opens fifty positions hoping one massive winner covers all the losers. Such approaches might occasionally pass a single-day profit target but will inevitably fail the minimum trading days requirement. The rule forces traders to demonstrate repeatable processes rather than gambling behavior. When planning your challenge, consider market conditions for the upcoming weeks—trading during major news events, holidays, or low-liquidity periods can make it harder to find quality setups. Smart traders spread their minimum days across two to three weeks rather than rushing through consecutive sessions, allowing them to be selective about trade quality.

4. Profit Targets: The Finish Line That Demands Discipline

Every funded account evaluation includes a profit target—the amount you must earn to successfully complete the challenge and receive a funded account. These targets typically range from 8% to 10% for first-phase evaluations and 4% to 5% for second-phase challenges in two-step programs.

The psychological challenge of profit targets can't be overstated. Early in an evaluation, traders often trade cautiously, respecting risk limits and following their strategy precisely. Then they reach 70-80% of their profit target, and suddenly the finish line appears close enough to taste. This is where discipline often crumbles. Traders start forcing setups that aren't quite perfect, increasing position sizes to "get there faster," or holding winners too long hoping for that final push. These target-induced behaviors frequently lead to violations just steps from success.

The professional approach involves completely ignoring profit targets in your day-to-day trading. Your focus should remain on executing your strategy with proper risk management, letting the profit target come to you rather than chasing it. Many successful traders at firms like TradersYard reach their targets without even checking their progress daily—they know their edge produces roughly X% per week, and they trust the process to eventually hit the threshold. Additionally, understanding that reaching the profit target doesn't mean you should immediately stop trading (most challenges allow you to exceed targets) removes the artificial pressure of trying to land exactly on the number.

Creating Your Funded Trading Account Rules Checklist

Now that we've covered the major rule categories, let's build a practical, actionable checklist you can use throughout your evaluation. This isn't just a list to read and forget—print it, post it next to your trading station, and review it before every trading session until these rules become second nature.

Pre-Trading Session Checklist:

• Verify current account balance and calculate today's maximum daily loss dollar amount
• Check your current overall drawdown percentage from starting or highest balance
• Confirm how many minimum trading days you've completed and how many remain
• Review upcoming news events that might create unusual volatility (use TradingView's economic calendar for planning)
• Set hard stop-loss alerts at daily loss limit minus a safety buffer
• Document your maximum position size based on current risk parameters

During Trading Checklist:

• Monitor open position profit/loss in real-time, including unrealized amounts
• Calculate your current daily loss including worst unrealized point if positions moved against you
• Verify each new trade's risk amount keeps you within remaining daily loss allowance
• Confirm stop-loss orders are placed and functioning correctly
• Check correlation between open positions to avoid concentrated risk
• Maintain trading journal entries for each position with entry rationale

Post-Trading Session Checklist:

• Calculate final realized and unrealized profit/loss for the day
• Update overall drawdown tracking spreadsheet or journal
• Record trading day count toward minimum requirement if profit was generated
• Review any rules that came close to violation and why
• Assess emotional state and decision quality throughout the session
• Plan next session's approach based on current progress toward goals

This systematic approach transforms abstract rules into concrete daily actions. Most rule violations don't happen because traders deliberately break rules—they occur because traders lose track of their numbers during the heat of trading. Your checklist serves as both prevention and documentation.

5. Prohibited Trading Practices: The Fine Print That Matters

Beyond the numerical limits, funded accounts include rules about how you can and cannot trade. These prohibited practices often catch traders by surprise because they seem innocuous or aren't immediately obvious in the terms and conditions. Violating these can result in immediate account termination, even if you're profitable and within all drawdown limits.

One common prohibition is copy trading or using external signals where you're not making your own decisions. Prop firms fund your skills and decision-making, not your ability to follow someone else's calls. Similarly, most firms prohibit tick scalping—strategies that hold positions for mere seconds to capture tiny price movements—because these approaches often rely on latency arbitrage rather than legitimate market analysis. High-frequency trading strategies that generate hundreds of micro-trades also typically violate terms, as they create excessive operational complexity and risk for the firm.

Another critical prohibition involves hedging or opposite positions, especially across multiple accounts. Opening both long and short positions in the same instrument simultaneously might seem like a risk management technique, but many prop firms view this as gaming the evaluation system. The same principle applies to trading correlated pairs in opposite directions to create synthetic hedges. Additionally, holding positions over weekends or through major news announcements often violates rules because gap risk can't be controlled and might create losses exceeding daily limits.

Account sharing represents another serious violation that sometimes tempts traders. Letting a friend or mentor "help" by taking trades on your account, or pooling multiple accounts with different traders, breaks the fundamental premise of the evaluation—assessing your individual capabilities. Most prop firms employ sophisticated analytics to detect unusual pattern changes that suggest multiple people trading one account. The consequences extend beyond simple account termination; they can include permanent bans from the platform and forfeiture of any profits or fees paid.

6. Position Sizing and Lot Limits: The Mathematics of Sustainable Trading

Many funded account programs implement maximum position size limits that traders overlook until they accidentally violate them. These rules typically restrict how much capital you can allocate to a single trade or how many lots you can open simultaneously, creating a ceiling regardless of your confidence in a particular setup.

The typical structure limits position sizes to 1-2% risk per trade or caps total exposure at a certain lot size. For example, a $100,000 account might prohibit opening more than 10 standard lots at once or risking more than $1,000 on a single trade. These restrictions serve multiple purposes: they prevent catastrophic losses from single positions, discourage over-leveraging, and ensure that passing evaluations reflects consistent strategy rather than all-or-nothing gambling on a few massive positions.

Understanding the relationship between position sizing, stop-loss distance, and risk percentage requires mathematical precision that many traders lack. If you want to risk 1% ($1,000) on a $100,000 account, and your stop-loss is 50 pips away, you can trade a maximum of 20 micro lots (2 mini lots). Miscalculating this formula leads to accidentally taking oversized positions that violate rules or, more commonly, risking far more than intended when stop-losses trigger. We encourage all traders at TradersYard to use position size calculators and double-check their mathematics before entering any trade, regardless of experience level.

The psychological temptation to increase position sizes grows as traders approach profit targets or attempt to recover from small losses. This progression—starting conservatively then gradually increasing risk—appears in the trading data of most failed evaluations. The solution involves establishing your maximum position size on day one based on rules and risk tolerance, then never exceeding it regardless of circumstances. Treat position size limits as absolute rather than maximums to approach, and you'll maintain consistency throughout your evaluation journey.

7. Trading Hours and Instrument Restrictions

Not all funded accounts give you complete freedom regarding when and what you can trade. These restrictions often appear in the fine print and can limit your ability to implement certain strategies or trade during your preferred hours.

Some prop firms prohibit trading during specific high-impact news releases, typically including non-farm payrolls, central bank interest rate decisions, and major GDP announcements. The volatility and unpredictability during these events create risks that extend beyond normal stop-loss protection. Prices can gap through stop orders, spreads can widen dramatically, and the rapid price movements make it difficult to demonstrate the controlled, methodical trading that evaluations are designed to assess. Traders who specialize in news trading often struggle with funded accounts because their entire strategy becomes prohibited.

Instrument restrictions represent another common limitation. While most prop firms allow trading major forex pairs, indices, and commodities, some prohibit exotic currency pairs, individual stocks, or cryptocurrencies. These restrictions stem from liquidity concerns, higher spreads, and increased operational complexity. Before starting any evaluation, verify that the instruments you typically trade are allowed and understand any special rules that might apply to specific asset classes. For instance, some firms permit equity trading but only during regular market hours, prohibiting pre-market or after-hours sessions where liquidity thins.

Weekend holding restrictions prevent you from maintaining positions over market closures when gap risk becomes unmanageable. While holding through a weekend might align with your longer-term strategy, gap openings on Monday can create losses that exceed your daily limits before you have any opportunity to react. Professional traders typically close all positions before Friday close when trading funded accounts, even if they would hold those positions in their personal accounts. This conservative approach acknowledges that protected capital demands different risk management than personal funds.

8. Consistency Rules: Proving Your Edge Is Real

Some of the more sophisticated prop firms implement consistency rules that examine not just whether you're profitable, but how you achieved that profitability. These rules prevent one or two massive winning days from masking otherwise poor trading performance.

A typical consistency rule requires that your best trading day not exceed a certain percentage (often 40-50%) of your total profits. If you make $10,000 total with a 40% consistency rule, no single day can contribute more than $4,000 of that profit. This rule forces traders to demonstrate steady, repeatable performance rather than getting lucky on one volatile day or overleveraged position that worked out.

The logic behind consistency rules reflects the reality of professional trading careers. Firms don't want traders who occasionally hit home runs surrounded by strikeouts—they want players who consistently get on base. Steady performance indicates a reliable edge that will continue producing returns over months and years, while boom-and-bust patterns suggest luck or unsustainable strategies. Understanding this rule changes how you approach evaluations: rather than taking aggressive swings to hit your profit target quickly, you focus on steady accumulation through smaller, high-probability trades.

For traders who naturally take fewer, larger positions as part of their strategy (swing traders or position traders), consistency rules can feel restrictive. The solution involves adjusting your approach during evaluations to take slightly smaller positions more frequently, demonstrating the same edge across more trades. After receiving your funded account, you can often negotiate adjustments to rules that accommodate your proven trading style. The evaluation phase serves as proof of concept; the funded phase allows more personalized parameters.

9. Scaling Plan Requirements and Profit Split Understanding

Once you pass your evaluation and receive a funded account, a new set of rules governs payouts, profit splits, and account scaling. Understanding these parameters before you start trading ensures you know exactly what you're working toward and how your earnings will grow over time.

Most prop firms, including TradersYard, offer profit splits typically ranging from 70% to 80% for traders, with the firm retaining the remainder. This split compensates the firm for capital risk, technology infrastructure, and operational overhead. What catches many traders off guard is when and how payouts occur. Some firms offer biweekly payouts, others monthly, and some require reaching minimum profit thresholds before processing withdrawals. Reading and understanding these payout terms prevents frustration when you expect money that isn't yet available.

Account scaling represents one of the most attractive aspects of funded trading programs. As you demonstrate consistent profitability and rule adherence, most firms will increase your capital allocation. A typical scaling plan might increase your account by 25% after three months of profitable trading, then continue growing your capital every few months as long as you maintain performance. We structure our scaling at TradersYard to reward consistent traders with progressively larger accounts, potentially reaching $200,000 or more for proven performers. However, scaled accounts come with their own rules—often stricter drawdown limits or different profit split arrangements that you need to understand before accepting the increased capital.

The tax and legal implications of funded trading income also require attention. Most prop firms classify traders as independent contractors rather than employees, meaning you're responsible for your own tax withholding and reporting. The profit you receive represents income subject to self-employment taxes in most jurisdictions, and failing to plan for these obligations can create painful surprises at tax time. Consulting with a tax professional familiar with trading income ensures you set aside appropriate amounts and take advantage of any available deductions for trading-related expenses.

10. Evaluation Reset and Retry Policies

Despite your best preparation and discipline, you might violate rules and fail an evaluation. Understanding reset and retry policies before this happens reduces emotional decision-making when you're frustrated and disappointed.

Most prop firms offer evaluation resets at a reduced cost if you violate rules during a challenge. Rather than paying full price to start over, you might pay 20-30% of the original fee to reset your account to starting conditions with all rules reinstated. These reset options typically come with time limits—you might have 30 days after violation to take advantage of reduced pricing before you'd need to purchase a full new evaluation.

The psychology of resets creates interesting challenges. After blowing an account, the temptation to immediately reset and start again can be overwhelming. You feel like your strategy was working, you just made one mistake, and you want to prove you can do better right away. This mindset leads to emotional, revenge trading on your next attempt, often resulting in faster failures. The better approach involves taking at least a week between attempts to analyze what went wrong, whether your strategy needs adjustment, and whether emotional factors contributed to your violation.

Some traders fall into a costly pattern of repeatedly resetting evaluations without addressing underlying problems. If you've reset three or four times and continue failing, the issue isn't bad luck—it's either a flawed strategy or psychological challenges that need resolution before throwing more money at evaluations. Honest self-assessment becomes critical. Perhaps your strategy doesn't fit funded account rules (too aggressive, holds positions too long, trades prohibited times). Perhaps you're skilled enough but struggle with the psychological pressure of trading someone else's capital. Identifying the real issue saves money and frustration that comes from repeatedly failing for the same reasons.

Common Mistakes That Lead to Rule Violations

Even traders who thoroughly study the rules frequently violate them due to predictable patterns. Understanding these common mistakes helps you avoid becoming another statistic in the high failure rate of funded evaluations.

The revenge trading spiral represents the most common path to rule violation. You take a planned trade that stops out for a loss. Instead of accepting it and waiting for the next setup, you immediately enter another position to "make back" what you just lost. This second trade wasn't in your plan—it's emotional reaction trading. It goes against you, increasing your frustration and daily loss. Now you're even more desperate to recover, leading to a third impulsive trade. Within an hour, you've blown through your daily loss limit on trades that had nothing to do with your actual strategy.

Position size creep offers another subtle path to failure. You start the evaluation trading appropriate position sizes, risking 1% per trade as planned. But after several winners, you feel confident and bump up to 1.5% risk. That works out, so you try 2%. You're still within the rules, but you're now on a slippery slope. One losing trade wipes out two previous winners instead of one. The psychological impact of these larger losses triggers stress responses that affect decision-making. Before long, you take an oversized position that violates rules or triggers a sequence of losses that breach your maximum drawdown.

Misunderstanding calculation methodologies causes violations that feel unfair because the trader thought they were following rules. The most common confusion involves daily loss calculations based on account lows rather than just closed trade results. A trader might see their closed P&L for the day showing a $3,000 loss against a $5,000 daily limit, thinking they have plenty of room. But they don't realize an open position swung $2,500 against them before reversing, meaning their actual daily low was $5,500—an account violation even though their final closed trades only lost $3,000. This misunderstanding has ended countless evaluations for traders who thought they were safely within limits.

Building Long-Term Success With Funded Account Rules

The ultimate goal isn't just passing one evaluation—it's building a sustainable career as a funded trader. This requires shifting your mindset from viewing rules as obstacles to overcome toward seeing them as professional standards that elevate your trading.

Professional traders who maintain funded accounts for years rather than months develop specific habits that separate them from the majority. They treat the funded account like a business, maintaining detailed records, analyzing performance metrics, and constantly refining their approach. They view each trading session as another day at a job they're privileged to have, not as a gambling opportunity or a path to quick riches. This professional mindset naturally aligns with rule compliance because the rules reflect professional trading standards.

The relationship between your personal trading account and your funded account deserves consideration. Many successful funded traders maintain a small personal account where they can test new strategies, trade outside funded account parameters, or satisfy psychological needs for higher-risk trades. This separation prevents the temptation to bend funded account rules when you want to try something experimental or aggressive. Your funded account remains strictly for your proven, rules-compliant strategy, while your personal account gives you freedom to scratch other trading itches.

Continuous education about both trading skills and rule compliance keeps you sharp and adaptable. Prop firms occasionally update their rules, adjust parameters, or implement new monitoring technologies. Staying informed about these changes prevents accidental violations that occur simply because you weren't aware of updated terms. Following prop trading communities, participating in firm webinars, and engaging with other funded traders creates a knowledge network that helps everyone succeed.

How TradersYard's Rule Structure Supports Trader Success

At TradersYard, we've designed our funded account rules with a careful balance between protecting our capital and giving skilled traders room to implement their strategies effectively. Our approach differs from many competitors in ways that directly impact your probability of success and long-term satisfaction as a funded trader.

We offer both one-step and two-step evaluation programs, allowing you to choose the path that matches your trading style and confidence level. The one-step program features a single 10% profit target with clear drawdown rules, getting you to a funded account faster if you can demonstrate immediate profitability. Our two-step program splits the evaluation into more manageable 8% and 5% targets, reducing pressure and allowing for steadier progression. Both paths feature no time limits on challenges—you can take as long as necessary to hit targets while respecting risk rules, eliminating the artificial stress of racing against a calendar.

Our 80% profit split ranks among the most generous in the industry, ensuring you keep the vast majority of what you earn. We believe traders who generate profits deserve to be well-compensated, and our split structure reflects this philosophy. Combined with our scaling plan that can grow your account to $200,000 or more, this creates a clear pathway from evaluation to a professional trading income that can support your lifestyle.

The support infrastructure we provide goes beyond just capital. Our trader support team understands the rules inside and out and can answer questions before confusion leads to violations. We provide detailed dashboards that show your current drawdown, daily loss usage, and progress toward targets in real-time, eliminating the calculation confusion that causes so many rule violations. Our educational resources help you understand not just what the rules are, but why they exist and how to trade successfully within them. This comprehensive support system means you're never alone in your funded trading journey.