Drawdown Explained: Static, End-of-Day and Trailing
The loss floor is the rule that fails most challenges. The four types side by side with diagrams, balance vs equity, and which firms use which.
Drawdown is the floor of the account: the level at which the account is closed. What changes between firms is not the distance, it is whether and when that floor rises: never (static), at the end of the day, or chasing your equity moment by moment. Across the 415 accounts we compare, 157 have a static floor and 49 one that trails live equity: the same strategy has different odds on those two accounts. And in nearly every case the buffer is recalculated when you move to the funded account.
A floor, not a loss
The word drawdown confuses people because in ordinary trading it means "how far you fell from your peak". At a prop firm it means something harder and simpler: there is a level, and if the account touches it the evaluation is over. Not a warning, not a telling-off: the end of that account.
On the $100,000 accounts we compare, the median maximum loss is 4.5% of the capital. It sounds tight, and it is: that is why the type of floor matters as much as the distance, sometimes more.
The four types, side by side
The blue line is the same account curve in all four drawings. Only the dashed line changes: the floor. Watch when it moves and the rest explains itself.
The floor is set on day one and never moves. As you make money the gap above it grows and stays yours.
The floor rises only at the daily close, following the balance you close with. During the session it stays put.
The floor chases your peak equity moment by moment: it rises on a profit you have not closed yet.
The floor follows the closed-trade balance: it rises when you close in profit and ignores open gains.
The practical difference shows on a good day. With a static floor, $2,000 earned is $2,000 of extra room to be wrong tomorrow. With intraday trailing, that same $2,000 lifted the floor with you: your margin for error returns to what it was, and if you give the profit back you end up closer to the cut-off than before you earned it.
Balance or equity: the open position counts
This is the costliest misunderstanding in the field, and not only for beginners: one of the largest firms keeps "what is the difference between balance and equity?" among its official FAQs, next to its trading objectives. If it sits there, people walk into it daily.
- Balance · the sum of your closed trades. An open position, winning or losing, does not touch it.
- Equity · the balance plus the profit or loss of positions still open. It moves on every tick.
Where the floor is measured on equity, an open losing position already counts as a loss for the rule. The account can close while you are still waiting for price to come back, with the balance intact and the stop not yet hit. That is why people describe losing an account "without losing money": they lost equity.
The daily limit is a different rule
They are two floors stacked on each other, and you can fall off one without approaching the other. Maximum loss is the account's floor, for the whole evaluation. The daily limit is a floor that resets every day and measures only how much you may lose in that session. One bad day can end the account even with the overall floor far below you.
No daily limit does not mean free extra freedom: it usually comes with a floor that trails live equity, a stricter rule on the other side. Firms do not give room away, they move it.
Who uses what, across the verified accounts
| Floor type | When it moves | Accounts | Firms |
|---|---|---|---|
| Static | never: fixed at the start | 157 | 10 |
| End of day | at the session close, on the closing balance | 148 | 12 |
| Intraday trailing | in real time, on peak equity | 49 | 4 |
| Closed balance | when you close a trade in profit | 61 | 6 |
The firm counts add up to more than 17 because most firms run programs with different floor types: the choice belongs to the account, not to the firm. Rules change without notice, so always re-read the type in the terms of the program you are buying.
Static or trailing: who gains from which
more favourable on this line
The buffer is recalculated when you move up
This is the part almost nobody reads in advance, and the one that causes the biggest disappointments. The evaluation account and the funded account are two different contracts. When you move up, the floor is reset on the new account's starting balance, and the profit built during the evaluation usually does not come with you.
Concretely: a buffer that had grown to tens of thousands of dollars during the evaluation can return to the program's starting distance, a few thousand. Same account, same rules, but the number between you and the cut-off is far smaller. It is not hidden or irregular behaviour: it is written in the terms, and that is where to read it, for the program you are buying, on the day you buy it.
- 1StartThe floor sits at the program's set distance: that is all the room you have.
- 2Profit in the evaluationWith a static floor the room grows; with trailing the floor follows you and the room stays similar.
- 3PassingThe target is hit. The evaluation contract ends here: the buffer you built is not a vested position.
- 4Funded accountThe floor is reset on the new account's starting balance, under the program's terms. Read them before, not after.
The three questions to ask before paying
- What is the floor measured on: closed balance or equity? If it is equity, an open losing position already counts.
- When does it update: never, at the daily close, or in real time? That rule decides whether your profits become room or not.
- What changes on the funded account: how the floor is recalculated and what remains of the profit made in the evaluation.
The counts on this page come from the presets verified on 12 November 2026 and are regenerated at every site update, but any single firm can change its floor type, its distance or its daily limit overnight. Any example about a specific firm has to be checked in that firm's own terms, on the program and size you are buying, before you pay.
Testing it first costs less than finding out later
The same strategy, with the same risk per trade, does not have the same odds on a static floor and on one trailing live equity: that is exactly the comparison the Validator runs on the real rules of the 415 verified accounts from 17 firms. The result is a simulation, not a promise, but it is computed on the right floor type instead of on an industry average.
If you are still choosing, the maximum loss in money and the floor type of every account are already in the prop comparison table, next to what each $1,000 of room to be wrong costs — which across the 82 $50,000 accounts runs from $20 to $595.
Compare every account's rules › · Firms with no daily limit and no consistency rule ›
Frequently asked questions
What is the difference between static and trailing drawdown?
A static drawdown sets the account floor on day one and never moves it: everything you earn becomes extra room to be wrong. A trailing drawdown raises the floor as the account grows, so your margin for error stays roughly the same even after a good run. Across the 415 accounts we compare, 157 use a static floor and 49 use a floor trailing live equity.
Is drawdown measured on balance or on equity?
It depends on the firm's own rule, and this is the distinction that breaks most accounts by accident. Where the check is on equity, an open losing position counts: the account can be breached while the trade is still live and the balance still intact. Where it is on closed balance, only what you have closed counts. The fact that a major firm lists "what is the difference between balance and equity?" among its official FAQs shows how widespread the misunderstanding is.
Are the daily loss limit and the maximum loss the same rule?
No, they are two separate rules that can fire independently. Maximum loss is the overall floor of the account; the daily limit resets every day and measures how much you may lose in a single session. You can break the daily limit with the account still far above the overall floor, and lose it anyway. Across the 415 verified accounts, 120 have no daily limit, 235 have one that ends the account and 60 treat it as a soft limit.
Does the buffer stay the same on the funded account?
Almost never, and it is one of the harshest surprises on the path. The funded account is a different contract from the evaluation: the floor is recalculated on the new starting balance, and the profit built during the evaluation usually does not carry over. A buffer that looked enormous during the evaluation can shrink back to the program's starting distance. Read it in the firm's terms before buying, not after.
Which drawdown type is best?
It depends on how you trade, not on which sounds better. If you hold positions and let profits run, intraday trailing penalises you, because the floor rises on gains you later give back. If you end the day flat and rely on many small trades, a static floor gives you the biggest advantage as the account grows.
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Educational content, not financial advice. Prop firm challenges are simulated accounts; most traders do not pass them and trading involves risk. Links to props are affiliate links.