When a trader violates one or more of a prop firm's rules, resulting in the account being closed or suspended.
A breach occurs when you break one of the firm's trading rules, causing your evaluation or funded account to be terminated. Understanding what triggers a breach is essential to protecting your account.
Common Breach Triggers
- Max Drawdown Exceeded: Account equity or balance falls below the maximum drawdown limit
- Daily Loss Limit Exceeded: You lose more than the allowed amount in a single day
- Trading Outside Hours: Some firms restrict trading to specific hours
- Holding Through News: If your firm prohibits news trading and you hold a position
- Weekend Holding: Holding positions over the weekend when not allowed
- Exceeding Max Position Size: Trading more contracts/lots than permitted
- Copy Trading Detected: If the firm prohibits copying trades between accounts
What Happens After a Breach
- Evaluation account: You fail the challenge. You can pay for a new evaluation or use a reset (if available).
- Funded account: The account is closed. Some firms offer a "second chance" or discounted restart; most don't.
Preventing Breaches
- Set alerts at 50% and 75% of your drawdown limit
- Use PropTally's real-time rule monitoring to track proximity
- Reduce position size when approaching limits
- Know your firm's exact calculation method (equity vs balance vs EOD)
Soft Breach vs Hard Breach
Some firms distinguish between:
- Soft breach: A warning or temporary account freeze (rare)
- Hard breach: Immediate account termination (standard at most firms)