What is a trailing drawdown?

Definition A trailing drawdown is a maximum-loss limit whose floor moves up with the account's highest balance or equity and never moves back down, unlike a static drawdown fixed from the starting balance.

A trailing drawdown is a maximum-loss limit that follows the account up: each new high in balance or equity raises the floor, and the floor never moves back down. A static drawdown sets the floor once, from the starting balance, and leaves it there. Some prop firms use trailing limits in their evaluations.

Static vs trailing drawdown, with an example

A $100,000 account with a 10% maximum loss

Illustrative numbers. The floor sits $10,000 below the reference point. Under the end-of-day trailing rule, the reference is the highest end-of-day balance so far.

After	End-of-day balance	Static floor	End-of-day trailing floor
Start	$100,000	$90,000	$90,000
Day 1	$104,000	$90,000	$94,000
Day 2	$101,000	$90,000	$94,000
Day 3	$106,000	$90,000	$96,000

After day 3, the static account has $16,000 of room. The trailing account still has $10,000, the same as on day one.

The account’s high sets the floor, so profit does not buy extra room. A loss after a winning streak comes out of the same 10% as a loss on day one.

Three kinds of trailing

End-of-day. The floor is recalculated once a day from the balance at the firm’s reset time. Intraday peaks do not move it.
Intraday. The floor follows every new equity high as it happens, open profit included. On an account at its high, a trade that goes $3,000 up and then closes flat lifts the floor by $3,000 without a single losing trade: the room drops from $10,000 to $7,000.
With a lock. The floor trails until it reaches a set level, such as the starting balance, and then stops moving.

Two examples, as of October 2026. At FTMO, the 2-Step challenge has a static maximum loss of 10% of the initial capital, while the 1-Step recalculates it daily at 00:00 CE(S)T from “the highest account balance achieved at 00:00 CE(S)T of any preceding trading day”, or from the initial capital if that is higher (FTMO trading objectives). At Topstep, a futures firm, the Maximum Loss Limit “rises as your end-of-day balance grows, but never moves down. Once it reaches your starting balance, it locks permanently” (Topstep help). Rules change often, so check the firm’s own page for the account you trade.

A common mistake

Reading the room from the starting balance. After a run up to $106,000, a trader who thinks “I can lose $16,000” is working from the static rule. Under trailing rules, the answer is the distance from today’s equity to today’s floor. Where breaches are measured on equity, a floating loss that touches the floor ends the account even if the trade would have recovered.

MT5 has no trailing drawdown setting: the firm tracks the floor on its side, separately from its daily loss limit. The drawdown calculator shows how many losses in a row reach a given limit at your risk per trade.

Trailing drawdown and automated trading

An Expert Advisor does not know a firm’s floor unless it is told. PipWarden has no overall drawdown stop of its own, trailing or static, so a prop firm’s maximum loss is yours to track. Its daily loss limit runs on the UTC day and includes floating losses. That is not the same clock as a firm that resets at midnight Central European time. Prop firm daily drawdown and prop firm EA rules cover the rest, and drawdown explains the general measure.

Frequently asked questions

What is the difference between static and trailing drawdown?

A static drawdown sets the floor once, from the starting balance, and it never moves. A trailing drawdown raises the floor with every new high, so after a good run the account has no more room above the floor than it had on day one.

Do open trades count toward a trailing drawdown?

For the breach, often yes: as of October 2026, FTMO and Topstep, for example, count floating profit and loss. Whether open profit raises the floor depends on the type. End-of-day trailing uses the balance at the reset time; intraday trailing follows equity highs as they happen.

Educational content, not financial advice. Forex and CFDs are traded on margin and are high risk: you can lose money, and more than your deposit with some brokers. Examples use made-up numbers and show no real results. Read the risk disclosure.