Trailing Drawdown

What is Trailing Drawdown?

Trailing drawdown (also called a dynamic drawdown) is a risk management rule used by futures prop firms. Unlike a static drawdown that stays fixed at the starting balance, a trailing drawdown moves up as your account equity increases.

How it works (with math)

Example: You start with a $50,000 account and a $2,000 trailing drawdown.

• Day 1: Account at $50,000 → drawdown floor = $48,000
• You make $1,000 profit → Account at $51,000 → drawdown floor rises to $49,000
• You make another $2,000 → Account at $53,000 → floor rises to $51,000
• Now if the account drops back to $51,000, you are immediately stopped out

Intraday vs. End-of-Day (EOD)

This is the critical split in futures prop firms:

• Intraday (Live) Trailing — used by Apex Trader Funding. The drawdown floor updates in real time, tick by tick. If your account hits a new equity high mid-trade, the floor moves up immediately. This is significantly harder to manage.
• End-of-Day (EOD) Trailing — used by Topstep. The drawdown floor only adjusts at the market close. Open profits during the trading day don't affect the floor until the session ends.

Why it matters

Many traders pass evaluations but fail funded accounts because they don't understand when their floor locks in. Always verify whether trailing stops at the balance level or equity level and whether it's intraday or EOD.