Drawdown is the loss boundary that can end an evaluation or account. The label alone is not enough: you need to know what balance or equity figure moves the threshold, when it updates and whether it eventually stops moving.
Static drawdown
A static threshold generally stays at a fixed level. It can be easier to model because profits do not usually pull the loss boundary upward. Always confirm whether daily limits or other rules apply alongside it.
Trailing drawdown
A trailing threshold generally rises as the relevant account high increases. The important question is whether it follows realised balance, real-time equity or another figure. Open profit can matter if the threshold tracks intraday equity.
End-of-day trailing drawdown
An end-of-day approach generally updates at a specified daily calculation point rather than tick by tick. That does not automatically make it generous: the exact formula, time zone, buffer and stopping point still matter.
Questions to answer before paying
- Is the threshold based on balance or equity?
- Does unrealised profit move it?
- When does it update?
- Does it stop trailing at a particular balance?
- Is there a separate daily loss limit?
- Do commissions and fees count toward the breach?
Use the firm’s current official examples to test your understanding. If you cannot reproduce the calculation, ask the firm before purchasing.
This guide provides general education, not financial advice or a description of any specific firm’s current rule.