Drawdown rules are the single most important factor in your prop firm evaluation. They determine how much you can lose, how the limit moves, and when you breach. Yet most traders don't fully understand the differences between drawdown types.
Let's fix that.
What Is Drawdown?
Drawdown is the maximum amount your account can decline from a reference point before you breach (fail). Every prop firm has drawdown rules — they're the firm's primary risk control.
The key variables are:
- Type — how the drawdown floor moves (or doesn't)
- Calculation basis — balance-based vs. equity-based (open P&L included or not)
- Lock behavior — whether trailing stops at some point
The Four Drawdown Types
EOD Trailing (End-of-Day Trailing)
How it works: Your drawdown floor adjusts upward at the end of each trading day based on your closing balance. It only moves up, never down.
Example: You have a $100K account with $3,000 max drawdown. Your floor starts at $97,000. You close Day 1 at $101,500 — your floor moves to $98,500. If you close Day 2 at $101,000 (a down day), the floor stays at $98,500.
Who uses it: Apex Trader Funding, Topstep, Legends Trading, Alpha Futures
Implication: This is the most common type. Since it only adjusts at end-of-day, intraday swings don't affect your floor — you could be up $2,000 intraday and give it all back by close without your floor changing.
Intraday Trailing (Real-Time Trailing)
How it works: Your drawdown floor adjusts upward in real-time as your equity increases, including unrealized P&L.
Example: Same $100K account with $3,000 drawdown. You open a trade and it goes $2,000 in your favor — your floor immediately moves to $99,000. If the trade reverses, you now have less room.
Who uses it: FundedNext (Rapid challenges), Take Profit Trader (PRO accounts), Trade Day (as one of three options)
Implication: This is the strictest trailing type. Every tick in your favor permanently reduces your breathing room. Traders who let winners run are disproportionately penalized.
Static
How it works: Your drawdown floor is fixed at a set dollar amount below your starting balance. It never moves, regardless of how high your balance goes.
Example: $100K account with $3,000 drawdown. Your floor is permanently $97,000. Even if you grow the account to $110,000, your floor stays at $97,000 — you'd need to lose $13,000 to breach.
Who uses it: Trade Day (as one of three options), Funded Futures Network (funded accounts)
Implication: This is the most trader-friendly type. Once your account grows, you build an increasingly large buffer.
EOD Static
How it works: A hybrid — the drawdown is fixed and doesn't trail, but it's calculated based on end-of-day balance rather than intraday equity.
Implication: Similar to static but with EOD recalculation. Less common in the futures prop firm space.
The Lock Mechanism
Several firms use trailing drawdown that locks at a specific level — typically your initial starting balance. This means the drawdown trails up until your floor reaches the starting point, then stops trailing.
Why this matters: A trailing drawdown that locks effectively becomes static once you've earned enough profit. For example, if your $100K account has $2,500 trailing drawdown, once you reach $102,500, your floor locks at $100,000 and never moves again.
Firms with lock behavior: Apex Trader Funding (locks at profit target), FundedNext (locks at initial), Alpha Futures (locks at initial).
Which Type Is Best?
It depends on your trading style:
| Style | Best Drawdown Type | Why | |-------|-------------------|-----| | Scalpers | Static or EOD trailing with lock | Need room for rapid entries/exits | | Swing traders | Static | Hold positions through daily closes | | Conservative traders | Any with lock | Security of eventual static floor | | Aggressive traders | Static only | Need maximum room for larger positions |
Compare Drawdown Rules
Want to see exactly which drawdown type each firm uses, including lock behavior and dollar amounts? Use the comparison tool to see them side-by-side, or check our static vs. trailing deep dive.
Check the glossary for more definitions of drawdown-related terms.