What Is Trailing Drawdown?

A trailing drawdown is a maximum loss limit that moves up as your account reaches new highs, so the floor follows your best balance rather than staying at your starting balance. It is common in futures prop firm evaluations.

Example

On a $50,000 account with a $2,000 trailing drawdown, the floor starts at $48,000. If the account rises to $51,500, the floor rises to $49,500. Giving back $2,000 from the peak ends the account, even though you are still up overall.

Intraday vs. end-of-day trailing

• Intraday trailing follows your highest equity during the day, including open profit that you never closed.
• End-of-day (EOD) trailing only updates from your closing balance each day, which is more forgiving for traders who let trades run.

Many firms stop trailing once the floor reaches the starting balance. Check your firm's rules.

Model it with the risk of ruin calculator (choose "from peak"). Related: drawdown, daily loss limit, Topstep journal, Apex journal. See the trading glossary.