You want to try a prop-firm evaluation, but even after reading the rules, you are still asking, “How much can I actually lose?” Back at the trading bar, USK and Toreko work through the difference between balance, equity and the level at which an account fails. Using a fictional JPY 1 million account, we will see why an account can fail even while it is still in profit. At the end, you can check what to look up for your own account.
Toreko: Senpai, I’ve read the rules, but I still don’t understand how far my account can fall before I fail…
USK: Then let’s look at which number matters, and how far it can fall before the account fails.
First, what is this account for?
The prop-firm evaluation services discussed here let you trade in an account specified by the company to see whether you can meet both its performance requirements and its rules. That process is an “evaluation”; meeting the conditions is “passing.” Whether the account uses simulated or real capital, and what the company provides after you pass, depends on the product.
Our fictional evaluation account shows JPY 1,000,000 on screen. That does not mean you receive JPY 1,000,000 in cash, or that you pay JPY 1,000,000 to buy it. Money you actually pay, such as the purchase fee, is separate from the account figures used to measure performance.
An unfinished trade is an open “position.” Closing a trade realizes its profit or loss. In Part 1, we will cover how passing and failing work. Part 2 looks at trading methods, payouts and costs.
1. The target and the conditions that cause failure
Toreko: Can I fail even if there’s still a profit in the account?
USK: To pass here, you need a balance of at least JPY 1,100,000, all positions closed and no DD breach. Reaching a DD threshold means you fail.
DD, or drawdown, means a fall in account value. In this model, the DD rules define the permitted loss range. We call the amount at which the account fails its “threshold,” or “line.” There are two: an overall line and a daily line. Reaching either one means failure. We will work through their calculations in the next chapters.
How real products differ
Actual conditions depend on the company, product, account stage and when the agreement applies. The numbers in this article are examples to make the concepts consistent, not universal rules.
Start by keeping the goal and the failure condition separate: “Pass with a balance of at least JPY 1,100,000” and “Fail when equity reaches a DD line.”
2. Balance and equity
Toreko: If the screen says JPY 1,000,000, can I use all of it?
USK: It doesn’t mean you’re allowed to lose JPY 1,000,000. Separate rules determine the permitted loss. With that in mind, let’s distinguish starting capital, the balance after closed trades, and equity including floating profit or loss.
Balance reflects the results of trades you have closed. Equity adds the floating profit or loss on your open positions to that balance. On a Japanese platform, equity may also be labeled “effective margin.”
For example, a balance of JPY 1,000,000 plus JPY 20,000 of floating profit on an open trade gives equity of JPY 1,020,000. If you close that trade, the JPY 20,000 moves into the balance: balance JPY 1,020,000, floating profit zero, equity JPY 1,020,000. This explanation ignores costs and price changes.
Toreko: So even JPY 100,000 in floating profit doesn’t mean I’ve passed unless I close the trades.
For DD, we look at current equity. For passing, we look at balance after closing the trades. This model requires a balance of at least JPY 1,100,000, all positions closed, and no DD breach.
3. Two limits: overall and daily
Toreko: If the overall loss allowance is JPY 60,000, is it okay to lose JPY 50,000 today?
USK: No, that wouldn’t be okay. There are two lines, overall and daily. Whichever you reach first causes failure.
For this chapter, the overall line stays fixed at JPY 940,000: starting capital of JPY 1,000,000 minus JPY 60,000.
The daily line is the higher of the balance and equity at the start of that day, 09:00 Japan time or 00:00 UTC, minus JPY 40,000. If both opening values are JPY 1,000,000, the daily line is JPY 960,000.
As equity falls in this example, it reaches the daily line of JPY 960,000 before the overall line of JPY 940,000. Even with room left above the overall threshold, the account fails on daily DD.
Compare equity against both the overall line and the daily line.
Now that we have the two failure thresholds, let’s see whether they move when profits increase.
4. Three ways to calculate overall drawdown
Toreko: Does the overall line stay at JPY 940,000 forever?
USK: That depends on the account’s method. Let’s compare three methods as three separate accounts. Each has a JPY 60,000 allowance; what changes is the reference value.
Fixed
The line never moves from JPY 940,000: the starting JPY 1,000,000 minus JPY 60,000.
Trailing the highest end-of-day balance
Include the starting JPY 1,000,000 as the initial high-water mark. Thereafter, update it when an end-of-day balance exceeds that record. Subtract JPY 60,000 from the highest recorded value. Intraday floating profit alone does not update it.
For example, if you close profitable trades and the highest end-of-day balance becomes JPY 1,080,000, the overall line rises to JPY 1,020,000.
Trailing the highest equity, including floating profit
The starting equity of JPY 1,000,000 is the initial high-water mark. Each time equity sets a new high, including unrealized profit on trades that remain open, raise the line to that high minus JPY 60,000.
The fixed line stays at JPY 940,000. Under either trailing method, a line that has risen does not come back down. The allowance is always JPY 60,000, which is 6% of starting capital, not 6% of the peak value. Also, “end of day” describes when the line updates. A breach can still be assessed using current equity while you are trading.
The comparison in English: All three accounts have balance JPY 1,000,000 while equity rises to JPY 1,080,000, then falls to JPY 1,020,000 before day-end without closing trades. The fixed overall line remains JPY 940,000. The highest-end-of-day-balance line also remains JPY 940,000. Only the highest-equity line rises to JPY 1,020,000. Current equity of JPY 1,020,000 therefore reaches that third account’s overall threshold exactly, ending that account. All three daily lines remain JPY 960,000 and have not been reached.
Rather than relying on the name, check which value’s high is tracked, and when. Next, let’s follow the third method, highest-equity trailing, through one day.
5. Failing while still in profit on the same day
Toreko: I can’t believe you can fail when the account is still above where it started.
USK: It can happen when the line follows the highest equity, including floating profit. Let’s follow the same day’s sequence.
This day begins with both balance and equity at JPY 1,000,000. No trades are closed, so balance stays at JPY 1,000,000 throughout. The daily line is JPY 960,000, calculated as JPY 1,000,000 minus JPY 40,000.
Floating profit grows to JPY 80,000, setting a new equity high of JPY 1,080,000. The overall line rises to JPY 1,020,000: JPY 1,080,000 minus JPY 60,000. The daily line does not update with intraday highs, so it remains JPY 960,000.
Later, floating profit falls to JPY 20,000, bringing equity to JPY 1,020,000. That exactly matches the overall threshold of JPY 1,020,000, so the account fails at that moment. It has not reached the daily line of JPY 960,000.
Balance is still JPY 1,000,000. Floating profit alone does not meet the passing conditions.
When floating profit grows, check the overall line that has risen alongside it, rather than looking only at the profit figure.
6. A daily-reset example across 09:00 Japan time
Toreko: If I carry floating profit across 09:00 Japan time, what happens to the daily line?
USK: A higher opening equity can lift the line. Let’s look at just before the reset, at 09:00, and then afterward.
This is a different account from Chapter 5. Its overall line trails the highest end-of-day balance, which is JPY 1,000,000. No trades are closed, so balance stays at JPY 1,000,000.
1. Which amount do we subtract from to set the line?
Just before the reset, balance is JPY 1,000,000 and floating profit is JPY 80,000, making equity JPY 1,080,000. The outgoing day began with both balance and equity at JPY 1,000,000, so its daily threshold is JPY 960,000. At this moment, the daily line is JPY 960,000 and the overall line is JPY 940,000.
For the new day, take the higher of opening balance JPY 1,000,000 and opening equity JPY 1,080,000. Subtract the fixed JPY 40,000 from JPY 1,080,000.
2. When does that line change?
The model resets at 00:00 UTC, or 09:00 Japan time. Prices, balance, floating profit and positions have not changed, but the daily threshold becomes JPY 1,080,000 minus JPY 40,000 = JPY 1,040,000.
Current equity of JPY 1,080,000 is above it, so the reset itself does not cause failure. Even if equity falls back during that day, this daily threshold does not move down from JPY 1,040,000.
3. At what current equity does the account fail?
After the reset, floating profit falls from JPY 80,000 to JPY 40,000. Balance JPY 1,000,000 plus floating profit JPY 40,000 gives current equity of JPY 1,040,000. It exactly matches the daily threshold, so the account breaches daily DD and ends here. It fails before equity returns to JPY 1,000,000.
Check overall DD separately. This account uses highest-end-of-day-balance trailing: highest end-of-day balance JPY 1,000,000 minus fixed JPY 60,000 leaves the overall threshold at JPY 940,000. Equity of JPY 1,080,000, including JPY 80,000 of floating profit, does not update it by itself. Equity of JPY 1,040,000 has not reached the overall line of JPY 940,000.
Before carrying a position across the reset, write down the daily calculation’s reference value and reset time.
The following is a separate real-product example. Keep it distinct from the teaching model above.
7. Before you start trading
Toreko: What should I check on my own account before I start trading?
USK: Rather than writing down every number, work through these five points. If you can’t explain a condition for your own account, check the official rules before going ahead.
- Passing conditions / Additional real-product conditions
- The two lines / Overall methods
- Balance and equity / How breaches are assessed
- Daily resets and holding positions
- Official sources
The checkboxes are optional. Entries are not saved or sent. Check the official conditions behind each point and apply them to your own account.
Can I receive a payout as soon as I pass?
How do passing conditions differ from payout conditions? Part 2 also explains what to check about EAs, trading around news and holding positions. Read the rules after passing.
How does a prop firm work in the first place?
For beginners, our introduction explains the process from a challenge to a payout. Learn how prop firms work (Japanese).
Conditions left out of the teaching model
The calculations assume zero commissions and zero swaps, meaning holding-related adjustments, with no deposits, withdrawals or payout receipts. No minimum trading days, consistency requirement, deadline, trailing-stop point or cap is set. This is not a reproduction of a specific company’s account. For a real product, check the official conditions for its company, plan, stage and effective period.
FAQ
Have I passed if floating profit takes equity to JPY 1,100,000?
Does the daily reset erase floating profit or loss?
If the line updates at day-end, are breaches ignored during trading?
Glossary
Position: a trade that has not yet been closed.
Closing a trade: ending the trade and realizing its profit or loss.
Starting capital: the account’s initial value. In this model it is JPY 1,000,000, or 0% change from the start. It is also the denominator for the percentages.
Balance: the account figure reflecting realized profits, losses and other balance adjustments.
Floating profit or loss: the unrealized profit or loss on trades still open.
Account equity: the account’s current total value, including floating profit or loss and other relevant adjustments. In this model, equity equals balance plus floating profit or loss. Japanese platforms may label this “effective margin.”
DD / drawdown: a decline in account value. DD rules define the permitted loss range.
Overall DD / maximum DD: the loss limit applying to the account as a whole. This article mainly calls it overall DD.
Daily DD: the loss limit for a defined trading day. Check it separately from overall DD.
Allowance and threshold: the allowance is the amount subtracted in the calculation. The threshold, or line, is the resulting boundary for account equity. This model uses an overall allowance of JPY 60,000, 6% of initial capital, and a daily allowance of JPY 40,000, 4% of initial capital.
Trailing: raising the line in step with the highest recorded reference value. Which value is tracked depends on the product.
EOD / end of day: the end of a trading day. It describes update timing, not another name for daily DD.
Daily reset: setting the new day’s opening balance and opening equity. In this model, subtract a fixed JPY 40,000 from the higher of those two figures to recalculate the daily line. The value tested for a breach is current equity during trading.
UTC: Coordinated Universal Time, a shared time reference. Japan time is nine hours ahead of UTC.
Official rules used as references
FX/CFD plans, with a source-article check date of October 15, 2026. The model’s 10% target, 6% overall allowance, 4% daily allowance, 09:00 Japan-time reset and failure exactly at the threshold are its own assumptions. For a real product, identify not just the company but also the plan, stage and effective period. The dated descriptions below are retained from the Japanese article, not represented as freshly verified current terms.
- Fintokei ProTrader / ProTrader Swing: Daily and overall loss rules (Japanese) and the difference in daily references between standard ProTrader and Swing. The recorded rules calculate daily thresholds from equity or balance at 00:00 UTC and test current equity for a breach. The overall threshold is fixed at 90% of initial capital. These are the sources for the real-product example after Chapter 6.
- FTMO CFD 1-Step / 2-Step: Trading Objectives, by plan. In the recorded 2-Step rules, overall DD is initial capital minus 10% of initial capital; the daily line is that day’s midnight CE(S)T balance minus 5% of initial capital. In the recorded 1-Step rules, overall DD is the higher of initial capital and the highest previous midnight balance, minus 10% of initial capital; the daily line is that day’s midnight balance minus 3% of initial capital. These provide real-product examples of fixed and highest-end-of-day-balance methods. Their allowances, times and exact breach boundaries are not identical to this model.
- Blueberry Funded standard 1-Step: 1-Step Challenge: Complete Guide. The recorded conditions are a 10% target, fixed 6% overall loss allowance, and a daily line calculated from the higher opening balance or equity minus 4% of initial capital. The official reset time recorded in the source is 5:00 PM EST. Flex 1-Step is a separate product. Our daily formula takes inspiration from this method, but the 09:00 Japan-time reset, additional passing conditions, exact-equality boundary and end-of-day overall trailing example are not presented as a reproduction of Blueberry’s account.
Additional reference: the relevant futures-prop account type
Apex Intraday Trailing Drawdown provides a comparison from a different market of a method that trails the highest equity including floating profit. Do not apply it directly to FX/CFD account terms or to the numbers in this teaching model.
Before buying, record the conditions for your own account and the date you checked them. Confirm changeable terms against the official information.
For first-time Fintokei buyers, our guide explains StartTrader entry conditions and loss rules through conversations and diagrams: Fintokei StartTrader guide (Japanese).
