Soft breach vs hard breach: know your firm's terms

[FXS London Scalper]

Prop firms use different terms for rule violations. Understanding them prevents unpleasant surprises.

Hard breach:
- Immediate account termination.
- Usually for daily loss limit or max drawdown violations.
- No appeal in most cases.

Soft breach:
- Rule violation that doesn't end the account but has consequences.
- Examples: holding over the weekend when not allowed, trading during restricted news, exceeding lot limits.
- Consequences may include closing the trade, removing profits from that trade, or a warning.

Why it matters:
- Some traders think all rules are soft and get terminated for a hard breach.
- Others think all rules are hard and avoid trades they could take.

What to check in your firm's terms:
- Which rules are hard, which are soft?
- What happens on a soft breach: warning, profit removal, account reset?
- How is the daily loss calculated (balance or equity, at what time)?

Do you know which of your firm's rules are hard and which are soft?