Prop firm drawdown explained — so you don't blow the account

Drawdown — the maximum you can lose before the account ends — is the single most important rule to understand, because the type matters as much as the number. A "10% drawdown" can be lenient or brutal depending on how it's measured. This is an educational explainer, not advice.

The two numbers every drawdown has

• Daily loss limit — the most you can lose in one day (often 3–5%). Breach it and the day (or account) is done.
• Overall / max loss limit — the most you can lose in total before the account ends.

Both are usually expressed as a percentage, but the reference point is what catches people out.

Static drawdown — fixed and predictable

A static (or absolute) max loss is measured from your starting balance and never moves. If a $100K account has a 10% static drawdown, the floor is $90K — full stop. FundingPips 1-Step (6% static), FundedNext 2-Step (10% static) and The5ers (10% from initial balance) work this way. This is the most forgiving type: profits don't tighten the floor.

Trailing drawdown — follows your peak

A trailing drawdown moves up with your equity and never resets down. Make money and the floor rises behind you; the buffer you started with shrinks as you profit. Upcomers' "Dynamic Risk Shield" (10% below highest equity in the challenge, 6% funded), Maven 1-Step (5% trailing) and FundedNext Instant (6% trailing) are examples.

The cruelest variant follows peak balance including unrealized profit, as Apex's Intraday Trailing Drawdown does — so giving back open gains on a winning trade can breach it before you ever close in the red.

End-of-day vs intraday trailing

Trailing comes in two flavours:

• Intraday trails your highest equity during the session — tighter, punishes giving back open profit.
• End-of-day (EOD) only updates the peak at the close — more forgiving intraday. FTMO's 1-Step uses an end-of-day trailing mechanic; several futures firms offer an EOD Trail option alongside Intraday.

How to protect the account

• Convert the limit to dollars, not just percent, before you trade.
• On a trailing plan, treat open profit as fragile — banking partial gains protects the floor.
• Know whether your daily loss is measured from balance or equity, and from which day's reference point (The5ers uses the higher of prior-day close or 00:00 balance).
• Remember the funded floor is often tighter than the challenge.

Key takeaways

• Static drawdown is fixed from your start; trailing follows your peak and never resets down.
• Trailing on unrealized profit (intraday) is the harshest — open profit can breach it.
• End-of-day trailing is more forgiving intraday than intraday trailing.
• Always convert the limit to dollars and check the daily-loss reference point.

Compare drawdown types side by side

The comparison tool lets you filter by static vs trailing drawdown and daily-loss figures; each firm dossier states the mechanic per product; and the glossary defines every term.