What is the Consistency Rule?

🎓 PROP TRADING TERMINOLOGY

What is the Consistency Rule? 📜 DEFINITION: Some prop firms have a consistency rule that states no single trading day can make up more than a certain percent of your total profit. This percentage varies by firm and can range from 30% to 45% 📊

Example: Let's say you're a trader at XYZ Proprietary Trading Firm, and they have a consistency rule where no single trading day can make up more than 40% of your total profit.

Here's an example to illustrate how this rule works:

Suppose your total profit for the week is $10,000.

According to the firm's rule, no single trading day can contribute more than 40% of this total profit.

• Monday: You make $4,000 in profit. 💰
• Tuesday: You make $3,000 in profit. 💰
• Wednesday: You make $2,000 in profit. 💰
• Thursday: You make $500 in profit. 💰
• Friday: You make $500 in profit. 💰

Now, let's calculate the percentage of profit each day contributes to the total profit:

• Monday: $4,000 / $10,000 = 40% 📈 
• Tuesday: $3,000 / $10,000 = 30% 📈 
• Wednesday: $2,000 / $10,000 = 20% 📉 
• Thursday: $500 / $10,000 = 5% 📉 
• Friday: $500 / $10,000 = 5% 📉 

In this example, no single trading day exceeds the 40% limit set by the firm's consistency rule.

However IF you make $6000 one day and only $1000 the following days, the consistency rule will be breached and you will not pass the challenge. ❌

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