Prop Firm Consistency Rule Definition, Types and Examples

What is the consistency rule and why does this rule exist? Why is it important to keep this rule in mind, and which prop firms have consistency rules in place? I’ll explain in detail and reveal the current consistensy rules of the top futures prop firms.

What Is The Consistency Rule in a Prop Firm?

The consistency rule requires prop traders to show constant performance before either successfully mastering a trading challenge in order to get funded, or requesting a payout of profits from the funded account. The consistency rules clearly define, that not even one single day’s profit should exceed a defined percentage of the total profits over a given period. A consistency rule can be implemented by a prop firm, and every firm can define the percentage on its own, or simply work without such a rule.

Consistency Rule Calculator

You can easily calculate, if you meet the consistency rule of your prop firm, or not. Simply use the following formula:

Example 1

• Let’s say your most profitable trading day as a funded trader was $1,000.
• Let’s assume your prop firm has a defined consistency rule percentage of 50%.

Here is the math:

That means, that you need to have a balance of $2,000 before you can make your first withdrawal.

Example 2

• Let’s say your most profitable trading day as a funded trader was $2,000.
• Let’s assume your prop firm has a defined consistency rule percentage of 20%.

Here is the math:

Does the Consistency Rule Affect the Trading Challenge or the Funded Account?

The consistency rule can either affect the trading challenge, the funded account, or both. This depends on the rules set by the prop firm.

That means, some prop firms only use the consistency rule as part of their paper-trading / sim-funded challenge as a rule that needs to be maintained in order to get finally funded with a funded trading account.

Some prop firms, then drop the consistency rule once a trader gets funded, but some prop firms maintain the consistency rule also in a funded account. Some firms even only use the consistency rule for funded accounts.

What Type of Consistency Rule Is the Best?

The higher the consistency rule percentage, the better it is for the trader.

Why?

Because a higher percentage allows you to have a higher most profitable day’s result. Often, traders have a big winning day, and then multiple smaller gains or losses. If the percentage value is too low, it can happen that you have multiple high-earning trading days, but you can’t pay out because of an unfavorable consistency rule. So, keep that in mind before choosing your prop firm.

Also, consider if the rule is only in place for the funding challenge, or if it is also valid for funded accounts.

What Happens if I Do Not Maintain the Consistency Rule Limits?

There are two impacts of missing the consistency rule limits.

In prop firm challenges, missing the consistency rule limit leads to an increase of the profit target value. So, you do not fail the prop firm challenge, but the overall profit target in order to get funded can increase.

Example:

• Let’s say your profit target in the prop firm challenge is $2,500
• Let’s assume your prop firm has a defined consistency rule percentage of 50%.

That means, that your most profitable trading day should not be greater than 50% of $2,500, so $1,250. If your best trading day is greater than $1,250 the profit target will rise accordingly. Let’s stay by the example and say that your best day was $1,500 with your consistency rule percentage of 50% That now means that the overall profit target rises from $2,500 to $1,500 (biggest profit day) / 50% (consistency target) to $3,000 (new profit target for your account).

Only if you reach the new profit target, do you get funded.

In funded accounts, things are similar but not the same because you are already in a funded account and not meeting the consistency rule requirements does not hold you back from getting funded, it prevents you then from the possibility of making a payout. So, it is better to trade with a prop firm that uses the consistency rule only in prop firm challenges, but not funded accounts.

Why Does the Consistency Rule Exist?

The prop firm’s perspective here is that it encourages disciplined trading, helps traders with their risk management, and ensures performance stability.

Those aspects are true and there is no doubt about it, that in a perfect world, a trader is super consistent.

But, realistically, the rule also exists to keep payouts of profits as low as possible. A prop firm is a business and cash flow is an important factor. So while a prop firm’s reputation depends a lot on its payout policies, practices, and amounts, it also has to put rules in place to make its business a well-calculable one.

Which Prop Firm Has the Best Consistency Rule Parameters?

I consider Topstep to have the best consistency rule in place because the rule is only valid during the challenge phase, but not for funded accounts and has a fair percentage value. Take Profit Trader, Earn2Trade and TradeDay also have fair consistency rules (with less favorable conditions than Topstep, but still on the better side).

Overall, I don’t like the idea of having a consistency rule on funded accounts because with that rule on funded accounts the chances of making a payout decrease. That’s why I don’t like Apex Trader Funding and Elite Trader funding.

Keep in mind though, the consistency rule is only one rule prop firms have to protect not only traders but also themself. For example, there are rules for a minimum number of trading days, trailing drawdown limits, profit targets, maximum position sizes, or scaling plans, which also need to be considered.