FundedCoreProp Firm Drawdown: Static vs Trailing, Explained
Static, trailing and end-of-day drawdown, explained with worked examples — and why the drawdown type matters more than the profit target.
Published · 8 min read
Maximum drawdown is the rule that decides whether you keep your account. It is also the rule most often misunderstood, because two firms can advertise "10% maximum drawdown" and mean completely different things.
The three types
Static drawdown
A fixed percentage of the starting balance. It never moves.
On a $100,000 account with an 8% static drawdown, your account is closed if equity touches $92,000. That is true on day one, and it is still true after you have grown the account to $130,000 — at which point you are $38,000 away from failure.
Static drawdown is the most forgiving version and the easiest to track, because the number never changes.
Trailing drawdown (intraday / equity-based)
Follows your highest equity point, including unrealised profit on open positions.
Start at $100,000 with a 5% trailing drawdown: your stop-out is $95,000. Open a trade that goes $3,000 in your favour, so equity peaks at $103,000. The stop-out level immediately rises to $98,000 — even if you then close the trade at break-even.
The consequence traders find unfair: a trade that reached +$3,000 and closed at +$0 has permanently cost you $3,000 of room. You did not lose money and you lost buffer anyway.
End-of-day trailing drawdown
Follows your closing balance, updated once a day. Intraday spikes do not count.
Same $100,000 account, 10% end-of-day trailing. You close Monday at $104,000, so from Tuesday your stop-out is $94,000. Intraday equity swings during Monday are ignored.
This sits between the other two: harsher than static, considerably kinder than intraday trailing.
The same account under all three
A trader deposits into a $100,000 account, has a strong week reaching $108,000, then a drawdown back down.
| Drawdown type | Stop-out at start | Stop-out after reaching $108,000 | Room remaining |
|---|---|---|---|
| Static 8% | $92,000 | $92,000 | $16,000 |
| End-of-day trailing 8% | $92,000 | $100,000 | $8,000 |
| Intraday trailing 8% | $92,000 | $100,000 (or higher on unrealised peaks) | $8,000 or less |
The trader made the same $8,000 in all three columns. Under static rules they now have twice the room they would have under a trailing rule. Nothing about their trading differed.
This is why comparing prop firms on profit split alone is close to meaningless. A 90% split with an intraday trailing drawdown can easily be worth less than an 80% split with a static one.
Where the drawdown "locks"
Many programmes with trailing drawdown stop trailing once it reaches the initial balance. On a $100,000 account with a 5% trailing rule, the stop-out climbs from $95,000 to $100,000 and then freezes there permanently.
This is a meaningful protection and worth confirming. The practical effect is that the first 5% you make is the hardest, and after that the rule behaves like a static one.
How this interacts with payouts
On many firms, withdrawing profit also locks or resets the drawdown reference. Example: an account grows from $100,000 to $120,000 and the trader withdraws $16,000, receiving $12,000 with the firm retaining $4,000. The drawdown reference locks at $100,000.
Read this rule before your first payout, not after. Traders occasionally withdraw at a point that leaves them with almost no buffer on a $104,000 balance.
The daily loss limit is a separate rule
Do not conflate them. Maximum drawdown is the floor for the life of the account. The daily loss limit is a floor for one session, and it usually resets at a specific time — commonly 5:00 PM EST — on either the prior day's closing balance or closing equity, whichever is higher.
Worked example. $100,000 account, 5% daily limit, reset at 5:00 PM EST. At reset your balance is $100,000 but you are holding a position up $2,000, so equity is $102,000. The limit is calculated on the higher figure: 5% × $102,000 = $5,100. You breach if intraday equity touches $96,900. With no open position, the level would have been $95,000.
That $1,900 difference is entirely rule mechanics, and it is why a firm that publishes the calculation is more useful than one that publishes the percentage.
What to do with all this
Before you buy any evaluation, answer these four questions from the firm's own published rules:
- Is the maximum drawdown static, end-of-day trailing, or intraday trailing?
- Does it stop trailing at the initial balance, and at what exact level?
- Is the daily loss limit measured on balance or on equity, and at what time does it reset?
- Does requesting a payout change the drawdown reference?
If you cannot find all four answers in writing before paying, that is itself the answer.
The rules are public. The capital is ready.
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