Two traders can make exactly the same trades and get opposite results, purely because of how their drawdown is measured. One keeps the account. The other loses it while in profit. The difference is whether the floor under the account stays put or follows them up.
- Static drawdown: your loss limit is fixed from day one and never moves.
- Trailing drawdown: your loss limit follows your highest point upwards, so profits raise the bar you cannot fall below.
- Static is more forgiving once you are in profit. Trailing punishes giving back gains, even if you are still up overall.
- Before buying any evaluation, check which type it uses, what it trails (balance or equity) and whether it ever stops.
What drawdown means in a funded account
Every prop firm sets a floor: an account value you must never touch. Hit it and the account is breached, usually instantly and permanently. The maximum drawdown is the distance between where you start and that floor.
The percentage gets all the attention. What decides whether you pass is whether the floor stays where it is or follows you up.
Static drawdown: the floor never moves
With a static drawdown the floor is set once, from your starting balance, and stays there for the life of the account. On a $10,000 account with a 6% static drawdown, the floor is $9,400. It is $9,400 today, and it is still $9,400 when the account is at $12,000.
That means every dollar you make becomes extra room. Grow the account to $11,000 and you have $1,600 between you and the floor instead of $600. It is why static drawdown is generally seen as the more trader-friendly option.
Trailing drawdown: the floor follows your high point
With a trailing drawdown the floor moves up every time the account makes a new high, and it never moves back down. Same $10,000 account, 6% trailing: grow to $10,800 and the floor rises to $10,200. You are $800 in profit, but you still only have $600 of room, the same as on day one.
That is the trap. With a trailing drawdown you can fail while in profit. It rewards steady growth in one direction and punishes giving back gains after a strong run.
Balance, equity, intraday and end of day
Trailing drawdowns come in different strengths, and the small print matters more than the headline number:
- Trailing on closed balance: the floor only moves when you close a trade in profit. Open profit you give back does not count.
- Trailing on equity (intraday): the floor follows your highest value including open trades, tick by tick. A trade that runs $500 in your favour and comes back to breakeven can cost you $500 of room without you banking anything. This is the strictest version.
- End-of-day trailing: the floor only updates once a day, at the reset, based on where you closed.
Many firms also stop the trail once the floor reaches your starting balance, often called a lock. After that it behaves like a static floor at breakeven. If there is no lock, the floor keeps chasing you for the life of the account.
Side by side
| Static | Trailing | |
|---|---|---|
| Where the floor sits | Fixed from your starting balance | Follows your highest balance or equity up |
| Effect of profits | More room to trade | Room stays the same |
| Can you fail while in profit? | No | Yes |
| Suits | Swing traders and anyone who holds through pullbacks | Tight, consistent styles that rarely give back gains |
| What to check | The daily loss limit that sits alongside it | Balance or equity? Intraday or end of day? Does it lock? |
Five questions to ask any prop firm
- Is the max drawdown static or trailing?
- If trailing, does it follow closed balance or open equity?
- Does it update intraday or at the end of the day?
- Does it lock, and at what level?
- Is the same rule used in the funded account, or does it change after you pass?
If a firm cannot answer those in writing before you pay, that is your answer.
How TradePath handles it
Every drawdown rule is published on the plan page before checkout, and on one page in Trading Objectives. Our two static products are One Step and Two Step. On a $100,000 One Step account the floor is $94,000, and it is still $94,000 at $130,000. Everything else trails, and each product says exactly how:
| Product | Max drawdown | Type |
|---|---|---|
| One Step (FX & CFDs) | 6% | Static |
| Two Step (FX & CFDs) | 7% | Static |
| Instant Funding | 8% | Trailing |
| Instant Funding Lite | 5% | Trailing |
| Equities | 3% | Trailing on closed balance |
| One Step Futures | 3% to 6% by size | Trailing intraday |
| Funded Futures | 5% | Trailing end of day |
| Prediction Markets | 6% | Trailing on equity, including open positions |
One more thing to know: every product applies Lock Upon Payout by default. When you take a first payout, your floor locks at your starting balance. It is covered in our guide to how payouts work.
Common questions
Is static drawdown always better?
For most traders, yes, because profits give you more room. But trailing products are often priced or structured differently, so the right choice depends on your style and the full rule set.
What is the difference between max drawdown and daily loss limit?
The max drawdown is the overall floor for the account. The daily loss limit caps how much you can lose in a single day and resets daily. You have to respect both.
Can a trailing drawdown move down after a loss?
No. A trailing floor only moves up or stays put. Losses bring your balance closer to it; they never lower it.
Does open profit count towards a trailing drawdown?
Only if it trails on equity. If it trails on closed balance, only realised profit moves the floor.
Trading involves substantial risk. TradePath evaluations and funded accounts are simulated. This guide is general education, not financial advice. Rules can change; the program rules for the product you buy are what apply.