What does it mean when a prop firm account is breached, and what happens next?

A breached account is one that has broken a hard limit of its program, so it can no longer be funded or pay out. At Phoenix Trader Funding a breach comes from one of two places: the balance falling through the account's loss floor, or a trade that is prohibited whatever the balance is doing. The first is far more common, and on a Classic or Spark evaluation the floor it falls through is recalculated once a day rather than tick by tick.

The two ways an account breaks

Separating the two matters, because they do not carry the same consequence and they are not caught the same way.

A loss limit breach is arithmetic. Every account carries a floor underneath its balance, and closing below that floor ends the run. Nothing about intent or strategy enters into it, and there is no review to wait for.

A rule violation is different. It is a trade the program does not permit, and it can end an account that is comfortably in profit. Carrying a position past the session close is the clearest example, and it is prohibited on every account type we run.

Trailing drawdown, and why the close of the day matters

A trailing drawdown is a loss floor that rises as your balance rises, instead of sitting still at the level the account started on. It is the single most common cause of a failed evaluation anywhere in this industry.

An end of day trailing drawdown is one that recalculates only once, against the balance you finish the session with, and then holds still until the next close.

On a Classic or Spark evaluation the drawdown trails at the end of the day. The practical effect is that profit you make and hand back inside the same session does not leave a higher floor behind you: the floor is set from where you close, not from the best print of the afternoon.

That floor also stops climbing. The trailing drawdown stops adjusting at the starting balance, so once it has followed you up to the level the account opened at, it stays there for good. An account cannot end up with a loss floor above the balance it was opened with.

There is also a limit traders expect here and do not find. No daily drawdown applies to a Classic or a Spark, in evaluation or once funded, so a single bad day cannot end either account by itself. Only the trailing floor can.

Once an account is funded the behaviour splits by type, and it is worth reading before you add size. A funded Classic keeps the end of day floor. A funded Spark trails in real time through the session, so an unrealised swing sits live against the floor instead of waiting for the close. Merit is built differently again: no profit goal, no trailing floor, a static total loss limit, and a dynamic daily loss limit of 25 percent.

The rules that end an account whatever the balance says

A short list of trades is prohibited on every account type at Phoenix Trader Funding: holding a position overnight or over the weekend, hedging one account against another, and high frequency or automated bot execution.

Funded accounts add two more. Flipping, meaning token trades placed only to validate a trading day or to sit out an inactivity check, is prohibited. So is one tick trading on bonds.

What that list leaves open is wider than most traders assume. News trading is permitted on every account type, including the tier one releases. Scalping is permitted with no minimum holding time. Averaging into a position is permitted, and so is copy trading. The prohibitions are about carrying risk the firm cannot see and about gaming the account, not about how you choose to trade inside a session.

What happens after a breach

In an evaluation, a breach means the account will not be funded. A Classic or Spark evaluation can be reset and run again, which is the ordinary route back. A Merit evaluation cannot: it is one attempt, with no reset at any stage, and a trader who does not reach funding receives a written performance report instead.

On a funded account the consequence is a denied payout, closure of the account, or both. A denied payout is explained by email rather than left silent, which matters when the cause was a rule and not a loss.

The rules also loosen at the last stage. A Live account is the one that trades at a broker rather than in simulation, and on it every restriction above is waived except holding positions overnight or over the weekend. The account that has proved itself is the one with the fewest rules left on it.

Which floor applies to your own account

Three things decide the number you are actually trading against: the account type, its size, and whether it is still in evaluation or already funded. The drawdown type itself changes at that transition on a Spark, and that is the transition traders are caught by most often. The published rule tables for each account type sit on the Phoenix evaluations page, and the broader rule questions are answered in the Phoenix support FAQ.

One requirement is often mistaken for a breach and is not one. The consistency requirement limits how much of your total profit can come from a single day, and failing it delays or blocks a payout rather than closing the account. It is scoped by account type and by stage, which is covered in our answer on how the consistency rule works.

Common follow-up questions

Does an intraday swing raise my drawdown floor on a Classic evaluation?

No. On a Classic evaluation the trailing floor recalculates once, against the balance you close the session with, so profit made and handed back inside the same day does not leave a higher floor behind you.

Does the trailing floor keep rising forever as the account grows?

No. The trailing drawdown stops adjusting once it reaches the balance the account started with, and it stays there from that point on. An account can never carry a loss floor above the level it was opened at.

Can a breached evaluation be run again?

A Classic or Spark evaluation can be reset and attempted again, which is the ordinary route back after a breach. A Merit evaluation cannot be reset at any stage, because it is a single attempt by design.

What happens to a payout request if the account broke a rule?

On a funded account a violation can mean the payout is denied, the account is closed, or both. A denied payout is explained by email, so the trader is told the reason rather than left to guess at it.

Does hedging between two of my own accounts count as a breach?

Yes. Hedging one account against another is prohibited on every account type, funded or in evaluation. It counts as a rule violation rather than a loss limit breach, so it can end an account that is showing a profit.

Do the same restrictions apply on a Live funded account?

No. On a Live account every restriction listed here is waived except holding a position overnight or over the weekend. It is the stage carrying the fewest rules, and it trades at a broker rather than in simulation.