This is where things get real. Most failed prop firm challenges involve trailing drawdown — not because traders don't know it exists, but because they don't feel its effect until it's too late.
Static (Fixed) Drawdown
Static drawdown is set once, at the beginning of your challenge, and never moves.
- $100,000 account with 10% static max drawdown
- Your floor: $90,000 — forever
- You grow your account to $130,000? Floor stays at $90,000
- You now have $40,000 of buffer — the floor never chases you up
Static drawdown is
trader-friendly. As you grow, your safety net relative to your current balance gets larger. The most successful traders on FTMO benefit from this because profitable growth actually increases their room to absorb bad days.
Firms using static drawdown: FTMO (max drawdown), FundedNext (most plans)
Trailing Drawdown
Trailing drawdown follows your highest achieved equity upward and never comes back down. As your account grows, your floor rises with it.
The formula:
Trailing Floor = Highest Balance Ever Achieved - Trailing Drawdown Amount
Example: $100,000 account, 10% ($10,000) trailing drawdown
| Account Peak |
Trailing Floor |
Your Buffer |
| $100,000 (start) |
$90,000 |
$10,000 |
| $105,000 |
$95,000 |
$10,000 |
| $112,000 |
$102,000 |
$10,000 |
| $120,000 |
$110,000 |
$10,000 |
Notice: your buffer in dollar terms never grows. The floor always stays exactly $10,000 below your peak. The moment you hit $120,000, your floor becomes $110,000 — and you can never get that buffer back even if you give back profits.
This creates a dangerous trap: Many traders make early profits, feel confident, increase position size, hit a losing streak, and find their floor is now higher than where they started — leaving almost no room left.
Firms using trailing drawdown: TopStep (trailing max drawdown), Apex Trader Funding (trailing on most plans)
"For a deeper breakdown of how static and trailing drawdown play out across real challenge scenarios, read: Static vs Trailing Drawdown Explained "
End-of-Day (EOD) vs Intraday Trailing
Trailing drawdown has two sub-types that make a material difference:
End-of-Day Trailing: The floor only updates at the end of the trading day based on closed profits. Floating trades don't count. If you're up $3,000 on open trades at 4PM but close nothing, the floor doesn't move — until those trades are closed.
Intraday Trailing: The floor updates in real-time based on live equity. If you're up $3,000 floating and the floor trails up to $97,000 — then the trade reverses and you give back $2,500 — your floor is still at $97,000 even though your equity is now only $100,500. You suddenly have $3,500 less buffer than you thought.