Trailing vs static drawdown: why the same trades can pass one challenge and fail another
Two challenges can both say "maximum loss 10%" and behave completely differently. On one, the line never moves. On the other, it follows you up every time you make money. The difference decides how you should manage winning trades.
Static drawdown: a floor that never moves
The floor is set once, from your starting balance, and stays there. On FTMO's 2-Step Challenge it's the initial capital minus 10%: $90,000 on a $100,000 account, whether your balance later climbs to $104,000 or $115,000.
This is the most forgiving type. Profit you make moves you further away from the floor, so a good start buys you room.
Trailing drawdown: a floor that follows your peak
The floor sits a fixed distance below the highest level your account has reached, and it only moves up. Once it rises, it never comes back down. Here is the same series of trades on two accounts, both with a $5,000 limit on $100,000:
| Moment | Equity | Static floor | Trailing floor |
|---|---|---|---|
| Start | $100,000 | $95,000 | $95,000 |
| First winners | $104,000 | $95,000 | $99,000 |
| Best moment | $108,000 | $95,000 | $103,000 |
| A bad run | $102,500 | $95,000 | $103,000: breached |
Same trades, two outcomes: still $7,500 of room on the static account, failed on the trailing one. With a trailing floor, profit you give back counts as much as a fresh loss.
Intraday vs end-of-day trailing
There are two ways to decide what your "highest level" is.
- Intraday (real time). The floor follows your highest equity, open profit included, tick by tick. If a trade is $3,000 up and then closes at break-even, your floor has already moved up $3,000.
- End of day. The floor only moves at the daily close, based on the closing balance. FTMO's 1-Step works this way: the limit is the highest balance at midnight CE(S)T minus 10%. Topstep's Maximum Loss Limit also rises with the end-of-day balance, but it's monitored in real time, so a drop during the session still ends the account.
Your $100,000 account peaks at $107,000 during the day and closes at $103,000. With a $5,000 intraday trail, the floor is now $102,000. With an end-of-day trail, it's $98,000.
Does the trail ever stop?
On some firms, yes. Topstep's Maximum Loss Limit stops trailing once it reaches your starting balance; after that it behaves like a static floor. Other firms keep trailing for the whole challenge. Look for words like "locks" or "stops trailing" in your firm's rules.
How to trade a trailing drawdown
- Size from the distance to the floor, not from the starting balance. After a good run, that distance doesn't grow.
- With an intraday trail, don't let big open winners turn into losers: open profit you give back has already raised the floor.
- Take partial profits or move the stop to break-even sooner than you would on a static account.
- A huge first day can be a trap: it lifts the floor and leaves you with the same room as before, at a higher level.
Practise both before you choose a challenge
In the PrepFunded simulator you can run a challenge with a static or a trailing maximum loss and watch how much room you have left to the floor on every candle. It's the quickest way to find out which type suits how you trade.
Rehearse these rules for free
Set your firm's exact target, daily loss and maximum loss in the PrepFunded simulator and trade markets built on real price history, candle by candle. Fail here for free, not on a paid challenge.
Sources
Rules checked on 30 October 2026. Firms change their rules, so confirm them on the firm's own site before you buy a challenge.
PrepFunded is a challenge simulator. It isn't a prop firm, it doesn't offer funded accounts and nothing here is investment advice.