GLOSSARY · PROP FIRMS
What is trailing drawdown?
A trailing drawdown is a maximum loss limit that follows your account's highest value upward and never moves back down. Every new high raises the level at which the account fails, until, at several firms, the limit stops rising once it reaches the starting balance.
Also called: Trailing max drawdown · Trailing maximum loss · Trailing drawdown meaning · What is trailing drawdown
How does a trailing drawdown work?
Take a $100,000 account with a $5,000 trailing limit: it fails at $95,000. Grow it to $103,000 and the failure point rises to $98,000. Fall back to $100,000 and the failure point stays at $98,000, so you are now $2,000 from failing rather than $5,000, with the same balance you started with.
What is the difference between trailing and static drawdown?
A static limit stays where it started. FTMO's 2-Step account has "a static limit": on $100,000 its equity must stay above $90,000 however much the account has made. A trailing limit takes part of your gains with it, which makes it harder for any strategy that gives back open profit, including most trend-following. The limits at each firm are compared on the maximum drawdown page.
Does a trailing drawdown follow balance or equity?
It depends on the firm, and it changes what counts. FTMO's 1-Step limit is an "end-of-day trailing limit" that follows "the highest account balance achieved at 00:00 CE(S)T of any preceding trading day", and Topstep's "rises as your end-of-day balance grows". Both move once a day, from the balance at the end of the day, not from intraday peaks. A limit that trails peak equity, including open profit, is harsher: a trade that runs $3,000 into profit and comes back to breakeven raises the failure point by $3,000 without banking anything. Whatever the limit follows, the breach itself is measured on equity at these firms, so open losses count.
Trailing drawdown rules by firm
From each firm's own rules pages, read in September 2026.
| Firm and program | Limit | What it follows | When it stops rising |
|---|---|---|---|
| FTMO 1-Step | 10% of the starting capital | The highest balance at 00:00 Central European time on any earlier day | It does not lock; it resets when a reward is paid and a new account is issued |
| Topstep Trading Combine | $2,000, $3,000 or $4,500 on the 50K, 100K and 150K | The end-of-day balance | Locks permanently at the starting balance |
| Topstep Express Funded Account, 50K | Starts at −$2,000 against a $0 balance | The end-of-day balance | Locks at $0 once the balance reaches $2,000 |
| FundedNext Stellar Instant | 6% | Rises with profits | Stops at the initial balance |
| Alpha Capital Alpha One, 10% plan | 6% | The highest balance achieved | Fixed at the initial balance once the account reaches $106,000 on $100,000 |
What does "locks at the starting balance" mean?
Take Topstep's 100K Trading Combine, with a $3,000 limit: the account starts with its floor at $97,000. Each higher end-of-day balance lifts the floor, and once the end-of-day balance reaches $103,000 the floor reaches $100,000, where it "locks permanently". From then on the floor stays at $100,000, however high the account climbs. The early days are the dangerous ones: the room is smallest before the limit locks.
How do you trade with a trailing drawdown?
- Find out what it follows. End-of-day balance, intraday balance and peak equity each punish a different habit, and the firm's rules page says which one applies.
- On a limit that follows equity, open profit you give back costs you room. A trade that nearly reaches its target and reverses to its stop raises the floor on the way up and lowers your equity on the way down.
- Trade smaller until the limit locks. Where it stops at the starting balance, the room is smallest at the start.
- Model it before running a bot. It is the rule most likely to end an otherwise profitable automated system, and it is cheaper to discover in the prop firm drawdown calculator than on the account.
How often gold's own price would have tripped a trailing limit of each size is measured in our trailing drawdown study.
Common questions
What is trailing drawdown?
A maximum loss limit that rises with your account's highest value and never falls, so profits permanently raise the level at which the account fails.
How is trailing drawdown calculated?
The firm takes your highest balance, or at some firms your highest equity, and subtracts the allowed loss. On $100,000 with a $5,000 trailing limit, a high of $103,000 puts the failure point at $98,000.
Does trailing drawdown ever stop?
At several firms it stops once it reaches the starting balance; Topstep's limit "locks permanently" there. FTMO's 1-Step limit does not lock but resets when a reward is paid and a new account is issued.
What is the difference between trailing and static drawdown?
A static limit stays a fixed distance below the starting balance. A trailing limit moves up with your gains and never moves down.
Is trailing drawdown based on balance or equity?
Either, depending on the firm. FTMO's 1-Step and Topstep follow the end-of-day balance. A limit that follows peak equity also counts open profit, which makes it harsher.
Related terms
- Daily drawdown limitA daily drawdown limit, also called a daily loss limit, is the most a prop firm account may lose…
- Maximum drawdownMaximum drawdown (MDD) is the largest fall from a peak in account value to the lowest point that…
- Funded accountA funded account is the trading account a prop firm gives you after you pass its paid evaluation…
- Prop firmA prop firm, short for proprietary trading firm, gives traders an account to trade in return for…
- DrawdownDrawdown is the decline from a peak in account equity to the subsequent trough, expressed as a p…
Further reading
Educational information only, not financial advice. Trading leveraged products carries substantial risk of loss. Last updated 2026-09-25.