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Drawdown Types: Static, Trailing, and End-of-Day

The maximum drawdown is the lowest your account is allowed to fall before the evaluation ends. Firms compute it three common ways: static (fixed floor), trailing (follows your peak up), and end-of-day trailing (follows your peak only at the daily close).

Target audience: Evaluation traders who need to know precisely where their account-ending line sits and whether it moves.

Learning objectives

  • ✓Define static, trailing, and end-of-day trailing drawdown.
  • ✓Compute where the drawdown floor sits after a winning run.
  • ✓Explain why open profit can move a trailing floor against you.
  • ✓Choose position size with the drawdown model in mind.

Definition

The maximum drawdown is the lowest your account is allowed to fall before the evaluation ends. Firms compute it three common ways: static (fixed floor), trailing (follows your peak up), and end-of-day trailing (follows your peak only at the daily close).

Why it matters

The drawdown model is the single most important rule in any evaluation, because it defines exactly how much room you have and when that room moves. Two firms with the same headline drawdown can be very different to trade if one trails intraday and the other only at the close. Misreading it is the most common silent account-killer.

Static drawdown: a fixed floor

A static (or fixed) maximum drawdown sets one floor for the whole evaluation and never moves it. If a 50,000 account has a 2,000 static drawdown, the account ends if equity ever touches 48,000, no matter how high you climb first. This is the most forgiving model: once you build a profit cushion, the distance to the floor only grows, so a good start permanently buys you room. You always know exactly where the line is.

Trailing drawdown: the floor chases your peak

A trailing drawdown moves up as your account makes new highs, keeping a fixed distance below the peak. With a 2,000 trailing drawdown, if your equity peaks at 53,000 the floor rises to 51,000, even if you started at 50,000. The danger is that on many firms the trail follows your highest unrealised (open) equity, so a trade that goes 1,500 in your favour and then comes back can lift the floor and end the account at a level that looks like a small loss on paper. Open profit you never bank can still move the line against you.

End-of-day trailing: the floor moves only at the close

An end-of-day (EOD) trailing drawdown is a middle ground: the floor follows your balance, but it only ratchets up based on your end-of-day balance, not your intraday peak. This means intraday swings do not tighten the floor; only profits you carry into the daily close lock in a higher line. EOD trailing is gentler than intraday trailing because it does not punish giving back open profit within a session, but you must still know your current floor every morning. Always confirm which trailing variant your firm uses before sizing a trade.

Visual models

Drawdown recovery curve: the gain required accelerates as equity base shrinks
Drawdown recovery curveA convex recovery curve shows that small losses require modest gains, while deep drawdowns require dramatically larger gains on a reduced equity base.0%+25%+50%+75%+100%+125%+150%-0%-10%-20%-30%-40%-50%-60%-10% -> +11%-20% -> +25%-50% -> +100%Recovery is earned on less capitalA 50% loss doubles the required return.The first job is keeping the curve shallow.gain to recoverdrawdown from equity peak

Worked examples

Example 1: The same trade, three outcomes

Start at 50,000 with a 2,000 drawdown. You take a trade that runs to +1,800 open profit, then reverses to -200 on the day. Static: floor stays 48,000, you are fine. Intraday trailing: the floor lifted toward 49,800 at the peak, so a pullback to roughly 49,800 ends the account even though your day looks like a small loss. EOD trailing: the floor did not move intraday, so you are fine unless you closed the day above your prior peak. Same trade, three very different results.

Drawdown recovery curve: the gain required accelerates as equity base shrinks
Drawdown recovery curveA convex recovery curve shows that small losses require modest gains, while deep drawdowns require dramatically larger gains on a reduced equity base.0%+25%+50%+75%+100%+125%+150%-0%-10%-20%-30%-40%-50%-60%-10% -> +11%-20% -> +25%-50% -> +100%Recovery is earned on less capitalA 50% loss doubles the required return.The first job is keeping the curve shallow.gain to recoverdrawdown from equity peak

Common mistakes

Assuming all firms use the same drawdown model.

Forgetting that intraday trailing can follow open, unrealised profit.

Letting a big open winner come all the way back on a trailing account.

Not knowing the exact current floor before placing a trade.

Sizing as if a trailing account were static.

Myth vs reality

Myth

That the drawdown floor only moves when you bank profit.

Reality

No paired reality note provided.

Myth

That a small paper loss cannot end a trailing account.

Reality

No paired reality note provided.

Myth

That the headline drawdown number tells you the whole risk.

Reality

No paired reality note provided.

Risk considerations

  • On intraday-trailing accounts, take partial profit so an open winner cannot lift the floor and trap you.
  • Always recompute the floor after a new equity high before risking more.

Practice exercises

1. Locate and track your drawdown floor

Identify your firm's drawdown model and track the floor across a few simulated days.

  1. Confirm whether your drawdown is static, intraday trailing, or end-of-day trailing.
  2. Write today's exact floor in account currency.
  3. After any new equity high, recompute the floor before the next trade.
  4. On a trailing account, note where open profit would move the floor against you.

Quiz

Q1. How does a static drawdown differ from a trailing one?

Q2. Why can a small paper loss end an intraday-trailing account?

Q3. What is gentler about an end-of-day trailing drawdown?

Try it yourself

Put the lesson math into an interactive lab and check the numbers.

Max DD in $
$10,000
Daily DD in $
$5,000
1% losses to bust
10
Total loss room
10%

Read: you can lose 10trades of 1% before your account is busted under this firm's static drawdown. Trailing drawdown firms tighten this number after every winning streak.

Next lesson

The Profit Target and Minimum Trading Days

This lesson is educational content only and is not financial advice. Prop firm rules vary by firm and change over time; always read your firm's current rulebook. Trading involves substantial risk, and passing an evaluation does not guarantee profitable funded trading. Trade only with risk you can afford to lose.