Static drawdown
The Static Drawdown floor is fixed below the starting balance and never moves. On a $100,000 account with a 10% maximum drawdown, the floor sits at $90,000 from the first day to the last. Every dollar of profit widens the gap above it.
Static floor on a $100,000 account
Floor = starting balance − drawdown %- Starting balance
- $100,000
- Maximum drawdown
- 10%
Floor (fixed)
$90,000
A trader who reaches $106,000 has a $16,000 cushion to the floor, not the $10,000 they started with. Static drawdown is the most forgiving of the three for exactly this reason: profit becomes permanent room. The floor constrains a trader who is down and never one who is up.
Trailing drawdown: a floor that follows you up
A Trailing Drawdown floor rises as the account makes new highs, keeping a roughly fixed distance below the peak. Where static drawdown turns profit into permanent room, trailing drawdown takes some of that room back. As the high rises, so does the floor beneath it.
The two trailing variants differ only in what counts as a new high. EOD Drawdown measures the high at the daily close. Intraday trailing measures it tick by tick. That single difference is the most misunderstood rule in prop trading, and the most expensive.
End-of-day trailing
An end-of-day trailing floor updates once per day, at the close, against the highest closing balance the account has recorded. Intraday movement does not count. A position that spikes into profit during the session and is closed back down before the daily boundary leaves the floor untouched.
EOD floor after a $106,000 best close
Floor = highest close − trailing distance- Highest closing balance
- $106,000
- Trailing distance (10% of start)
- $10,000
Floor (until a higher close)
$96,000
If the account's best close is $106,000, the end-of-day floor sits at $96,000 and stays there until a higher close arrives. The trader can give back intraday gains all day without moving the floor, because only the closing balance is measured. This makes end-of-day trailing the more forgiving of the two trailing variants for an active intraday trader.
Intraday trailing: the floor that counts unrealised profit
An intraday trailing floor updates continuously, against the highest equity the account reaches at any moment, including the unrealised profit on open positions. The floor rises the instant a position moves into profit, whether or not that profit is ever booked.
This is the mechanic that catches traders who ride a winner. A position runs to an open profit of $8,500, taking the account to $108,500 on screen. The intraday floor moves to $98,500 at that moment. The trader holds, the trade reverses, and the position is closed back at $106,000. The realised result looks fine. The floor, though, has already locked in $98,500 and does not come back down.
Intraday floor after a $108,500 unrealised high
Floor = highest intraday equity − trailing distance- Highest intraday equity
- $108,500
- Trailing distance (10% of start)
- $10,000
Floor (locked in)
$98,500
From there, an ordinary decline to $98,000 in equity breaches the $98,500 floor and ends the account, even though the trader never closed a position below $100,000. The breach is caused entirely by profit that was shown and handed back. Under end-of-day trailing the same sequence survives, because the $108,500 was never a close.
The floor-lock milestone
Trailing floors do not rise forever. Most lock once the floor reaches the starting balance, a point reached when the account is up by the full drawdown amount. On a $100,000 account with a 10% trailing drawdown, the floor reaches $100,000 when the peak reaches $110,000. At that moment the floor stops trailing and stays at $100,000 for the rest of the account.
The Drawdown Floor Lock matters because it converts a trailing floor into a static one at breakeven. Past the lock, a trader cannot fall below their starting balance, and they keep the full benefit of any further profit as permanent room. Before the lock, every new high tightens the floor; after it, the floor is fixed.
Whether the lock sits at the starting balance or at another milestone is firm-specific. The principle holds across firms: a trailing floor rises to a defined point and then stops.
The three on one path
The comparison above runs a single equity path through all three rules. On the give-back scenario the intraday floor chases an unrealised high and breaches on the later decline, the end-of-day floor that saw only the closes survives, and the static floor fixed far below is never in question. Switch to the steady scenario and all three survive, because nothing is handed back. The trading is identical in both. Only the rule changes the outcome.
Which drawdown type an account uses is set by the firm and stated in the rules. It is the single parameter that most changes how a profitable but volatile trader fares during an Evaluation Phase or on a Funded Account, which is why it is worth confirming before an evaluation is paid for.