Prop Firm Rules You Didn't Know Could Get You Banned

Maximum Adverse Excursion (MAE) measures how far a trade goes against you before you close it. Many traders understand drawdown limits but miss MAE monitoring entirely. Here is how it works: if your funded account has a $2,500 trailing drawdown and you enter a trade that goes $2,000 against you before recovering and closing at breakeven, you technically survived -- your account is intact. But the firm just recorded an MAE violation. You held a position that risked 80% of your drawdown limit on a single trade. One MAE violation is a data point. Repeated MAE violations are a pattern. Apex reported that one trader generated 1,200+ MAE violations in seven days. Even if every single trade eventually recovered, the pattern demonstrates reckless risk management that the firm will not tolerate.

Hedging in prop firm context means holding opposite positions in correlated products -- for example, going long ES and short NQ simultaneously, or long Gold and short Silver. To the trader, this might feel like a spread trade or a risk reduction strategy. To the firm, it looks like risk manipulation. The concern from the firm's perspective is that hedging can mask actual risk exposure. A trader who is long 5 ES and short 5 NQ has near-zero net market exposure but is consuming 10 contracts of the firm's risk capacity. It can also be used to lock in profits while staying "in a trade" to meet minimum trading day requirements. Apex, Topstep, and several other firms explicitly prohibit hedging across correlated products. The enforcement is automated -- the system flags any day where opposite positions exist in products like ES/NQ, Gold/Silver, or even ES/MES (same product, different size).

Stockpiling means maintaining a reserve of passed or active evaluations as backups for when funded accounts blow up. The strategy: buy 20 evaluations during a sale, pass 5-10 over time, and keep them in reserve. When a funded account is terminated, immediately activate the next one. This was a gray area for years. Firms allowed multiple simultaneous evaluations and did not explicitly prohibit maintaining a reserve. The implicit assumption was that traders would use multiple accounts to diversify, not to enable churn-and-burn cycling. As of late 2025 and early 2026, several firms have explicitly prohibited stockpiling. Apex called it out by name in their February 2026 enforcement email. The shift reflects a recognition that stockpiling enables the churn-and-burn pattern that costs firms the most money.

Some traders attempt to structure their payouts to extract maximum value before anticipated account closure. The pattern: trade aggressively to build profit, request a payout at the maximum allowed amount, then immediately resume aggressive trading. If the account survives to the next payout window, repeat. If it blows up, the extracted payouts exceed evaluation costs. Firms now track payout patterns alongside trading behavior. Apex introduced a 5:1 risk-to-reward ratio requirement for payouts and a minimum of 5 trading days at $50+ profit before requesting withdrawal. These rules specifically target the "extract and burn" pattern. Other firms use different mechanisms: Topstep caps payouts at $5,000 or 50% of balance. MFF Core caps at $3,500 per cycle. Bulenox caps first three payouts. Each of these limits serves the same purpose -- preventing rapid extraction before account termination.

Most traders understand the consistency rule at surface level: no single day can exceed X% of total profit. But the implementation details vary significantly across firms and create traps. Apex uses 30% -- and it applies only at PA and funded stages, not evaluation. Traders who pass evaluation with one big day and several small ones discover at the PA stage that their profit distribution fails the consistency check. They have to re-trade the PA spreading profit more evenly. Earn2Trade applies 30% to BOTH profit AND loss. Not only can no single day exceed 30% of total profit, but no single day's loss can exceed 30% of total losses. This is uniquely strict and catches traders who have one catastrophic loss offset by many small wins. Topstep and MFF use 50%, which is more lenient but still meaningful. Tradeify and Elite use 40%. Some firms apply consistency only to funded accounts, others from evaluation onward. Knowing exactly when and how your firm's consistency rule applies is critical.

Not all firms enforce all rules. Here is what each major firm actively monitors: Apex: MAE violations, scaling limits, hedging, consistency (30%), windfall gambling patterns, stockpiling, payout structuring. Automated daily monitoring since Dec 2025. Topstep: Daily loss limit (auto-flatten), consistency (50%), EOD drawdown. Mechanical enforcement -- positions liquidated automatically at limits. MyFundedFutures: Intraday trailing DD (Rapid), EOD trailing (Core), consistency (50%). Less public about behavioral monitoring but drawdown type itself prevents many abusive patterns. Earn2Trade: Progression ladder (forced gradual sizing), daily loss limit, consistency (30% both ways). Ladder prevents windfall gambling mechanically. TradeDay: Consistency (30% in eval, removed when funded), no news trading, no weekend holding. DD type chosen by trader creates self-selection. The takeaway: every firm has enforcement mechanisms, but they work differently. Reading your specific firm's rules -- all of them, including the terms of service -- is the only way to avoid unexpected violations.