Glossary
Trailing drawdown
Last reviewed: 16 September 2026·Tradelyze
Trailing drawdown is a prop firm loss limit whose floor follows the account's highest balance upward and never moves back down. The rule caps how much profit you may give back, not only how much you may lose. On a $30,000 account with a $1,500 trailing limit, a climb to $31,000 lifts the floor from $28,500 to $29,500.
In plain English
A trailing drawdown is a safety line that moves up every time your account makes a new high. It never moves back down. If your account falls to that line, the evaluation ends, even when you are still close to where you started. A static limit, by contrast, stays at one level for good.
New to this? Start with maximum drawdown.
What is trailing drawdown?
Trailing drawdown is a prop firm rule that ends an evaluation when the account falls a set dollar amount below its highest balance so far. A prop firm, short for proprietary trading firm, sells evaluation accounts, often called challenges, and funds the traders who pass its rules. The set amount is the drawdown allowance, and the level it marks is the floor. Firms and traders also call the rule a trailing max drawdown or a trailing maximum loss limit.
Two details make a trailing drawdown different from an ordinary stop-loss. The floor only moves up: every new high raises it, and losses never lower it. And the allowance does not grow with the account. Topstep's Maximum Loss Limit article, as of 16 September 2026, starts a 50K Trading Combine at $50,000 with a $48,000 limit. A $500 gain on day one moves that limit to $48,500.
A trailing drawdown matters for your money because profit does not become a cushion you keep. The gap between your balance and the floor can never be wider than the original allowance. An ordinary pullback after a good week can therefore end an account that is still in profit. The maximum drawdown page covers how a trailing limit relates to the maximum drawdown figure in a backtest report.
A trailing drawdown is a separate rule from a daily loss limit, which caps how much the account may lose within a single trading day. A challenge can have both, and each one is checked on its own terms.
How is a trailing drawdown different from a static drawdown?
A static drawdown limit sets the floor once, from the starting balance, and never moves it. A trailing drawdown limit moves the floor up with each new high. On the same account and the same trades, the two rules can give opposite verdicts. That is why the drawdown type matters as much as the percentage.
FTMO sells both kinds under the same 10% headline. As of 16 September 2026, FTMO's Trading Objectives page sets the 2-Step Challenge Maximum Loss Limit at a fixed level. That level is the Initial Simulated Capital, FTMO's term for the starting account size, minus 10% of it. The 1-Step Challenge limit is recalculated every day from the highest preceding balance, and in FTMO's words it “can only increase, but never decrease.” FTMO names one exception on the same page: when a Reward is withdrawn and a new FTMO Account is provided, the limit “fully resets”, returning the first-day limit to 90% of the Initial Simulated Capital.
Figure 1 and the table after it follow one $30,000 account with a $1,500 allowance through both rules, one trading day at a time.
| Point | Balance | Static floor | Trailing floor | Result |
|---|---|---|---|---|
| Start | $30,000 | $28,500 | $28,500 | Both rules allow $1,500 of loss |
| Day 1 (gain of $1,000) | $31,000 | $28,500 | $29,500 | The trailing floor rises with the new high |
| Day 2 | $30,600 | $28,500 | $29,500 | Trailing room shrinks to $1,100 |
| Day 3 | $30,000 | $28,500 | $29,500 | Trailing room shrinks to $500 |
| Day 4 | $29,500 | $28,500 | $29,500 | Trailing rule breached; the static rule still has $1,000 of room |
A static rule turns a good start into a lasting cushion. A trailing rule turns the same profit into a higher floor. The account that made $1,000 on day one is closed on day four, only $500 below where it began.
Is intraday trailing or end-of-day trailing harsher?
Intraday trailing is the harsher of the two. An intraday, or real-time, trailing limit raises the floor whenever the account reaches a new high during the session. That includes unrealized profit, the paper profit on a trade that is still open. An end-of-day trailing limit raises the floor only from the balance at the daily close. A gain that fades before the close never moves it.
The table follows one trade that runs up and fades. Equity here means the balance plus the current profit or loss on open trades.
| Moment | Equity or balance | Intraday trailing floor | End-of-day trailing floor |
|---|---|---|---|
| Day 1, mid-session: open trade shows $1,200 of profit | $31,200 | $29,700 | $28,500 |
| Day 1 close: trade exits $200 up | $30,200 | $29,700 | $28,700 |
| Day 2: a $600 loss | $29,600 | Breached | $28,700, $900 of room |
Under the intraday rule, a winning trade that gave most of its gain back cost $1,200 of room. An ordinary losing day then ended the account. Under the end-of-day rule, the same two days left $900 to spare.
Updated once a day is not the same as checked once a day
Topstep says its Maximum Loss Limit “updates at the end of each trading day but is monitored in real time throughout the session.” Its article, read on 16 September 2026, also says both realized and unrealized profit and loss count toward it. FTMO's Trading Objectives page recalculates the 1-Step limit at 00:00 CE(S)T, midnight Central European time. It also says account equity, including open positions, cannot drop below that limit. Under an end-of-day trailing rule the floor moves once a day, yet a dip through it during the session can still end the account.
When does a trailing drawdown stop trailing?
Whether a trailing drawdown ever stops rising depends on the firm and the account type. Some floors lock at a set level, after which the limit behaves like a static one; others trail for the life of the account. The cases in this table come from each firm's own help pages, checked on 16 September 2026. Firms revise these terms, so treat the table as dated.
| Firm and account | How the floor trails | Does it stop trailing? | Source |
|---|---|---|---|
| Topstep Trading Combine | Rises as the end-of-day balance grows and never moves down | Yes. It “locks permanently” once it reaches the starting balance. By Topstep's own 50K figures ($50,000 start, $48,000 limit), that happens when the end-of-day balance reaches $52,000 | Topstep, What is the Maximum Loss Limit? |
| Topstep Express Funded Account | The balance starts at $0; on a 50K account the limit starts at −$2,000 and trails up | Yes. It locks at $0 once the balance reaches $2,000, and after the first payout it is set to $0 | Topstep, What is the Maximum Loss Limit? |
| FTMO 1-Step Challenge | Recalculated daily at 00:00 CE(S)T from the highest preceding balance, or the Initial Simulated Capital if higher, minus 10% of the Initial Simulated Capital | No stopping level is described, and the limit “can only increase, but never decrease”. It does reset once: when a Reward is withdrawn and a new FTMO Account is provided, the limit “fully resets”, returning the first-day limit to 90% of the Initial Simulated Capital | FTMO, Trading Objectives |
| Other firms and account types | Varies | Not verified for this page | No primary source checked. Read the firm's own help center for the exact account you are buying |
A lock changes what a strategy has to survive. With a floor that locks at the starting balance, the trailing part applies only until the account has built one full allowance of profit. After that, the floor stays put. With a floor that never locks, every later peak raises the bar again, so give-backs matter for as long as the account is open.
How can a profitable account fail a trailing drawdown?
A profitable account fails a trailing drawdown when it gives back the full allowance from its best point. How far above the start that point was makes no difference. The rule measures the distance from the peak, not the result for the week or the month.
Take a $30,000 account with a $1,500 trailing allowance, the path drawn in Figure 1 on this page. Constructed illustration, not measured data. Day one gains $1,000, so the balance reaches $31,000 and the floor rises to $29,500. Days two, three and four give the gain back: $30,600, then $30,000, then $29,500. On day four the balance meets the floor and the account is closed. It ends $500 under its starting balance after spending the first three days at or over it.
A bigger run-up does not protect the account. If the same account had climbed to $32,000, the floor would sit at $30,500. A pullback to $30,500 would then end the evaluation while the account was still $500 in profit.
Check this on your own results
Find the largest dollar fall from any running high to a later low in your backtest. Compare it with the firm's allowance, not with your net profit. If the two are close, the lever is position size, meaning how many contracts or units each trade uses. The allowance is a fixed dollar amount, while every loss grows with the size you trade. Position sizing for prop firm challenges shows how to turn a dollar allowance into a trade size.
Which backtest number predicts a trailing-drawdown breach?
The backtest number that predicts a trailing-drawdown breach is the maximum intraday equity drawdown, compared with the firm's allowance. That figure is the largest dollar fall from any running high to a later low, with open trades valued at their current price. A drawdown sampled only at trade exits or daily closes misses dips inside the session. Against an intraday trailing rule, it can only understate the risk. The maximum drawdown page explains why close-to-close figures fall short.
Put both numbers in the same unit before comparing. Firms usually state the allowance in dollars: $1,500 on a $30,000 account is 5% of the starting balance. Once the account has grown, a drawdown quoted as a share of the peak reads smaller. The same dollar fall looks bigger as a share of the starting balance.
Three Tradelyze figures bear on a trailing limit:
- The total drawdown row in each firm's Rule Results table shows the drawdown under that rule set's drawdown type next to the limit. Both are a percentage of the starting account size. See how to read the Rule Results table.
- MC Max DD Real→P95 on the robustness card shows two drawdown figures. The first comes from your trades in their real order. The second comes from a simulation, called Monte Carlo, that replays your trades many times in different orders and mixes. A percentile is the level a given share of results stayed under. The second number, the 95th percentile, is the depth that 95 of every 100 simulated runs stayed within. Compare that second number with the allowance.
- Ruin Probability is the share of Monte Carlo runs whose fall from their own high point went past the firm's maximum total drawdown percentage. Each fall is measured as a share of that run's high point. Tradelyze needs Ruin Probability below 20% for the Monte Carlo check to pass, a line Tradelyze chose rather than a published standard. If the rule set has no total drawdown limit, Tradelyze leaves the figure blank. Ruin Probability and MC Max DD Real→P95 covers both figures.
Ruin Probability always measures from the high point, so it matches a trailing rule more closely than a static one. Against a static rule set, it can overstate the risk. All three figures are rebuilt from your closed trades and can miss a dip inside an open trade. Read them as a floor on the true intraday dip, not a worst case.
How does Tradelyze check static, trailing, end-of-day trailing and end-of-day balance limits?
Tradelyze checks a firm's maximum total drawdown with one of four drawdown types. The firm preset sets the type, or you choose it when you write a custom rule. Custom prop firm rules explains how to match a custom rule to a firm's terms. Each type works from your backtest's closed trades, not live equity. Each limit is a percentage of the starting account size, so a trailing limit is a fixed dollar distance below the high point. When a rule set also has a daily loss limit, Tradelyze checks it on a separate row of the same Rule Results table.
| Drawdown type | Custom rule label | Measured from | What it can miss |
|---|---|---|---|
| Static | Static | The starting balance, after each closed trade | A dip inside an open trade that recovered before the exit |
| End-of-day balance | EOD Balance | The starting balance, using end-of-day balances | Any dip during the session that closed back up |
| Trailing during the day | Trailing Realtime | The highest balance reached after any closed trade. Despite the name, it follows closed trades, not live equity | Highs and dips on open trades, which a firm that trails on live equity counts |
| Trailing at end of day | Trailing EOD | The highest end-of-day balance | Any dip during the session that closed back up, even at a firm that enforces the limit intraday |
Two differences from firm rules
Tradelyze's trailing types never stop trailing. There is no lock at the starting balance. Some firms lock the floor, such as the Topstep Trading Combine per Topstep's help center. For those firms, the Tradelyze check is stricter than the firm's rule once the account has grown past the lock level.
Trailing Realtime follows closed trades, not live equity. An open trade's paper profit never raises the Tradelyze floor, and a loss inside an open trade never counts against it. Against a firm that trails and enforces on live equity, treat a narrow pass as unproven.
A Qualifies badge means every rule Tradelyze checked passed. What Qualifies and Not Feasible mean lists the rules Tradelyze does not check. When a failed drawdown row makes the card read Not Feasible, test a smaller position size first. What to do when a prop firm card reads Not Feasible walks through that and the checks that follow. Presets record a firm's rules as understood when they were written. Match the drawdown type and allowance to the firm's current terms before relying on the verdict.
For the whole run, from upload to prop firm cards, see How Tradelyze validates a strategy. For account and credit questions, see the Learn FAQ.
Stage 4 · step 17 of 18. Next in the learning path: Backtest vs live trading
Check it on your own strategy
In Tradelyze, each preset and custom rule sets its drawdown type (static, trailing or end-of-day). The Rule Results table shows whether the floor was hit. Its total drawdown row names the type and puts your worst drawdown under it next to the limit. To judge the whole report, not one tile, use the pre-trade checklist.
Tradelyze re-runs an uploaded TradingView Pine Script strategy on your price data and checks it against your exported trade list. It then runs parameter optimization, walk-forward analysis, a five-check robustness score and prop firm rule checks. It does not place trades, give financial advice or guarantee a challenge pass, and it is in beta.
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Frequently asked questions about trailing drawdown
What is a trailing drawdown in a prop firm challenge?
A trailing drawdown is a loss limit whose floor sits a fixed dollar amount below the highest balance the account has reached, rising with every new high and never moving back down. Reaching the floor ends the evaluation. Topstep's help center, as of 16 September 2026, starts a 50K Trading Combine at a $50,000 balance with a $48,000 Maximum Loss Limit, which trails up to $48,500 after a $500 first-day gain.
What is the difference between static and trailing drawdown?
A static drawdown sets the floor once, from the starting balance, so profits build a cushion you keep. A trailing drawdown moves the floor up with each new high, so the gap between balance and floor never grows past the original allowance. On a $30,000 account with a $1,500 allowance, a climb to $31,000 leaves a static floor at $28,500 and lifts a trailing floor to $29,500.
Is intraday trailing drawdown harsher than end-of-day trailing drawdown?
Yes. An intraday trailing limit raises the floor whenever the account reaches a new high during the session, including unrealized profit on a trade that is still open. An end-of-day trailing limit raises the floor only from the closing balance. A trade that runs $1,200 into profit and then closes $200 up lifts an intraday floor by $1,200 but an end-of-day floor by only $200.
Does an end-of-day trailing drawdown only check my account at the close?
Not necessarily. The floor can move once a day while the limit is enforced all session. Topstep's Maximum Loss Limit article, as of 16 September 2026, says the limit updates at the end of each trading day but is monitored in real time, with realized and unrealized profit and loss both counting. A dip through the floor at midday can end the account even if the day closes higher.
Does a trailing drawdown ever stop trailing?
At some firms and on some account types, yes. Topstep's help center, as of 16 September 2026, says its Maximum Loss Limit locks permanently once it reaches the starting balance, and on a 50K Express Funded Account it locks at $0 once the balance reaches $2,000. FTMO's page describes no stopping level for the 1-Step Challenge, though the limit resets to 90% of the Initial Simulated Capital when a Reward is withdrawn and a new account is issued.
Does FTMO use a static or a trailing maximum loss?
Both, on different products. FTMO's Trading Objectives page, as of 16 September 2026, sets the 2-Step Challenge Maximum Loss Limit at a fixed level: the Initial Simulated Capital minus 10% of it. The 1-Step Challenge limit is recalculated daily at 00:00 CE(S)T from the highest preceding balance, can only increase within the life of one account, and is enforced against equity including open positions.
How can a profitable account fail a trailing drawdown?
By giving back the full allowance from its best point. In a constructed example, a $30,000 account with a $1,500 trailing allowance climbs to $32,000, which puts the floor at $30,500. A pullback to $30,500 then ends the evaluation while the account is still $500 in profit. Under a static rule the floor would still sit at $28,500, with $2,000 of room left.
Do unrealized profits raise a trailing drawdown floor?
At firms that trail intraday on equity, yes: the paper profit on an open trade can set a new high and lift the floor even if the trade later closes flat. At firms that trail on the end-of-day balance, only the closing balance moves the floor. Firms word this differently, so check whether the peak comes from equity or balance, and whether it updates intraday or at the close.
Which backtest number predicts a trailing drawdown breach?
The maximum intraday equity drawdown: the largest dollar fall from any running high to a later low, counting open trades at their current value, compared with the firm's allowance. A drawdown measured only at trade exits or daily closes misses dips inside the session, so against an intraday trailing rule it understates the risk. Monte Carlo simulation shows how much deeper the fall could get in other trade orders.
Does Tradelyze's trailing drawdown check stop trailing at the starting balance?
No. Tradelyze's Trailing Realtime and Trailing EOD checks keep measuring from the highest balance reached, with no lock at the starting balance. Trailing Realtime follows closed trades, not live equity. For a firm whose floor locks, such as the Topstep Trading Combine, Tradelyze's check is stricter than the firm's rule once the account has grown past the lock level. A failed drawdown row there can reflect the missing lock rather than a real breach.
Which drawdown types can I choose in a Tradelyze custom rule?
Four: Static, measured from the starting balance; EOD Balance, measured from the starting balance using end-of-day balances; Trailing Realtime, measured from the highest balance reached after any closed trade, so it follows closed trades, not live equity; and Trailing EOD, measured from the highest end-of-day balance. Each limit is a percentage of the starting account size. Pick the type the firm's current terms describe for the exact account you are buying.
Does a Qualifies badge mean I will pass a trailing drawdown?
No. Qualifies means every rule Tradelyze checked passed on your backtest's trades. Tradelyze rebuilds drawdown from closed trades, so a loss inside an open trade that recovered before the exit never counts, while a firm that enforces on live equity sees it. Results are hypothetical and a firm preset may be out of date, so treat a narrow pass as unproven and verify the firm's current terms.
Sources
Rules change; verify with the firm
Prop firm rules change often and differ by account type and purchase date. Every firm-specific figure on this page was read on the firm's own site on 14 September 2026 and re-checked on 16 September 2026. Check the current terms for the exact account you intend to buy before paying for an evaluation.
- Topstep, What is the Maximum Loss Limit?, help.topstep.com article 8284204, retrieved 14 September 2026 and re-checked 16 September 2026 — “The MLL is a trailing limit. It rises as your end-of-day balance grows, but never moves down.”; “Once it reaches your starting balance, it locks permanently.”; “The MLL updates at the end of each trading day but is monitored in real time throughout the session.”; both realized and unrealized profit and loss count toward it; the 50K Trading Combine example ($50,000 balance, $48,000 limit, $48,500 after a $500 day); and the 50K Express Funded Account limit that starts at −$2,000 and locks at $0 once the balance reaches $2,000 and is set to $0 after the first payout. The article prints no calendar date in its visible text; its page metadata gives a last-modified date of 2 September 2026.
- FTMO, Trading Objectives, ftmo.com/en/trading-objectives, retrieved 14 September 2026 and re-checked 16 September 2026 — the 2-Step Challenge Maximum Loss Limit as the Initial Simulated Capital minus a Maximum Loss Amount of 10% of it; the 1-Step Challenge Maximum Loss Limit recalculated daily at 00:00 CE(S)T from the highest account balance at 00:00 CE(S)T of any preceding trading day, or the Initial Simulated Capital if higher, minus 10% of the Initial Simulated Capital, which “can only increase, but never decrease”; the one documented exception, that “when a Reward is withdrawn and a new FTMO Account is provided, the Maximum Loss Limit fully resets, returning the first-day limit to 90% of the Initial Simulated Capital”; and the rule that account equity, including open positions, cannot drop below the limit.
- Tradelyze implementation, reviewed 15 September 2026 — the four drawdown types (Static, EOD Balance, Trailing Realtime, Trailing EOD), with Trailing Realtime following closed trades, not live equity; each limit as a percentage of the starting account size; drawdown rebuilt from closed trades; no lock at the starting balance; a daily drawdown limit, when the rule set has one, checked on its own Rule Results row; the total drawdown row showing the worst drawdown under the rule set's type next to the limit; Ruin Probability counted against the selected firm's maximum total drawdown percentage from each simulated run's high point, as a share of that high point, left blank when the rule set has no total drawdown limit, with the Monte Carlo check passing below 20%; and MC Max DD Real→P95 on the robustness card.
- Constructed illustrations — every $30,000 account example on this page, including Figure 1, is a constructed illustration, not measured data. The same four-day path appears in Figure 1 on the prop firm rules page.