Every prop firm sets a maximum drawdown, the lowest your account can fall before it is closed. The catch is how that floor is measured. A fixed drawdown is anchored to your starting balance. A trailing drawdown follows your account up as it makes money, which sounds generous and is actually the stricter of the two.

Fixed drawdown

On a $100,000 account with a 10 per cent fixed drawdown, the floor is $90,000 and it never moves. Make $8,000 and your buffer is now $18,000. Simple, and forgiving once you are ahead.

Trailing drawdown

On the same account with a 10 per cent trailing drawdown, the floor starts at $90,000 but rises with your highest balance, or on some firms your highest equity including open trades. Reach $105,000 and the floor is now $95,000. Reach $108,000 and it is $98,000.

Trailing Drawdown, Explained With Numbers. $100,000 (start): $90,000: $10,000; $104,000: $94,000: $10,000; $108,000: $98,000: $10,000; $110,000 then back to $103,000: $100,000: you are $3,000 from a breach while $3,000 in profit
Trailing Drawdown, Explained With Numbers: the figures from this section at a glance.
Account highTrailing floor (10%)Room below the high
$100,000 (start)$90,000$10,000
$104,000$94,000$10,000
$108,000$98,000$10,000
$110,000 then back to $103,000$100,000you are $3,000 from a breach while $3,000 in profit

The last row is where traders get caught. You pushed to $110,000, gave back $7,000, and you are still up $3,000 on the challenge, but the trailing floor sits at $100,000 and one more bad trade closes the account.

Equity trailing vs balance trailing

The harsher version trails your highest equity, meaning an open trade that is briefly $4,000 in profit pulls the floor up by $4,000 even if you close that trade at breakeven. The gentler version trails only your closed balance. Read the terms to see which one applies, because it changes how you manage a winning trade.

Many firms freeze the trailing floor once it reaches your starting balance plus the drawdown amount, or once you are funded. On a $100,000 account with a $10,000 trailing drawdown, the floor often stops rising at $100,000. After that it behaves like a fixed drawdown at the starting balance.

How to trade around it

  • Bank partial profit rather than letting a big winner balloon your equity high and drag the floor up with it.
  • Know your current floor before every session. It is not the number you started with.
  • On an equity-trailing account, be wary of holding several open winners at once, because their combined unrealised profit sets a floor you then have to stay above.
  • Once the floor freezes, you can trade with the room you have earned. Before that, treat every new equity high as a new, higher risk line.
Illustrative case: A funded trader who breached in profit

Marco was up 6 per cent on a $50,000 equity-trailing account. One trade ran to +$1,900 unrealised, pulling his floor up, then reversed, and he closed it at +$200. Two more small losses left his balance at $51,400, up 2.8 per cent on the challenge, but below the trailing floor of $51,500. Account closed. Had the floor been balance-trailing, the spike to +$1,900 would not have counted.

Traders read the profit target and the daily loss limit carefully and skim the drawdown line. On a trailing account the drawdown is the rule that ends most funded accounts, and usually while the trader still thinks they are winning.
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Where firms lock the floor

Most trailing floors stop rising at some point, which turns them into a static floor from then on. Examples from firms we have checked:

Firm and planHow the floor trailsWhen it stops
FTMO 1-StepHighest end-of-day balance minus 10% of the startIt can only rise; it never falls
FTMO InstantIntraday trailing, 10%Per its rules
Topstep Trading CombineEnd-of-day balance high minus the maximum lossLocks once it reaches the starting balance
FundedNext Stellar InstantTrails profit, 6%Stops once it reaches the initial balance
FundedNext FuturesHighest end-of-day balanceLocks once it reaches the initial balance

A floor that locks at the starting balance is much more forgiving once you are well in profit, because from then on you can never lose more than your gains. Reaching that lock point early, with payouts and banked profit, is the main strategy on trailing plans.

End-of-day vs intraday trailing, in numbers

Illustrative example: the same day on two plans

On a $50,000 account with a $2,000 trailing loss, a trade runs to +$1,500 during the day and is closed at +$200. On an end-of-day plan, only the +$200 close matters, so the floor rises to $48,200. On an intraday plan, the +$1,500 peak counts, so the floor rises to $49,500, leaving $700 of room instead of $2,000.

Strategies that suit trailing plans

  • Small, frequent profits banked quickly rather than large runs given back.
  • Partial exits as trades move in your favour.
  • One position at a time on intraday-trailing plans.
  • Regular payouts to reach the lock point sooner on plans that lock.

If your method needs room to breathe and often gives back part of a winning run, choose a plan with a static maximum loss instead.

Key terms

Trailing Drawdown, Explained With Numbers: Key terms. Trailing floor: A loss limit that rises with your highs; Lock point: Where the floor stops rising, often the starting balance; End-of-day: Measured from the closing balance; Intraday: Measured from equity during the day, including open trades
Trailing Drawdown, Explained With Numbers: Key terms: the figures from this section at a glance.
TermMeaning
Trailing floorA loss limit that rises with your highs
Lock pointWhere the floor stops rising, often the starting balance
End-of-dayMeasured from the closing balance
IntradayMeasured from equity during the day, including open trades

For the related rules and plans, see these guides.

Cite this guide

FX Recap, "Trailing Drawdown, Explained With Numbers", updated 9 September 2026, https://fxrecap.com/prop-trading/trailing-drawdown-explained

Free to quote with a link. Journalists: data and comment in our press room.

Frequently asked

What is a trailing drawdown on a prop firm account?

It is a maximum-loss floor that rises as your account makes new highs, then stops. Starting on a $100,000 account with a 10 per cent trailing drawdown, the floor is $90,000, but reach $105,000 and it becomes $95,000. It is stricter than a fixed drawdown because giving back profit can breach it even while you are still up on the challenge.

Does trailing drawdown use balance or equity?

It depends on the firm. Balance-trailing follows only your highest closed balance. Equity-trailing follows your highest equity including open trades, so a trade that is briefly deep in profit pulls the floor up even if you close it flat. Equity-trailing is harsher and changes how you should manage a winning position.

When does the trailing drawdown stop moving?

On most firms it freezes once it reaches your starting balance plus the drawdown amount, or once you move to the funded stage. On a $100,000 account with a $10,000 trailing drawdown, the floor typically stops rising at $100,000 and then behaves like a fixed drawdown.

Can I breach the drawdown while still in profit?

Yes, on a trailing account. If you hit a high, then give back enough that your balance falls below the trailed floor, the account closes even if you are still up on the challenge overall. Banking partial profit and knowing your current floor before each session are the defences.

When does a trailing drawdown stop moving?

On many plans it locks once it reaches the starting balance; Topstep's Combine and FundedNext's Instant and futures plans work this way. FTMO's 1-Step floor only rises, never falls.

Is intraday or end-of-day trailing better for traders?

End-of-day is more forgiving, because only the closing balance moves the floor. Intraday trailing counts open-trade peaks, so a winner closed at breakeven still raises the floor.