Trailing Drawdown
Also known as: trailing DD, trailing max loss, moving drawdown
Direct Answer
A trailing drawdown is a moving loss limit that follows your highest balance or equity peak upward but never trails back down. Once your peak rises, your floor rises with it, so unrealized profits effectively lock in. Hit the trailing floor at any point and the funded account is breached and closed immediately.
Trailing drawdowns come in two flavors: equity-trailing (updates intraday on unrealized P/L) and balance-trailing (updates only on closed trades). Equity-trailing is the strictest because a brief intraday spike can permanently raise your floor.
Most futures firms freeze the trailing once your balance is the starting balance plus the drawdown distance — at that point it converts to a static rule. Forex CFD firms more often keep the trail active indefinitely.
Which firms enforce this rule
| Firm | Strictness |
|---|---|
| Topstep | Strict |
| Apex Trader Funding | Strict |
| FundedNext | Standard |
| MyFundedFX | Standard |
Example scenarios
Scenario
$50k account with $2.5k trailing. Balance touches $52k intraday on an unrealized winner, then closes at $50k.
Outcome
On equity-trailing, the floor is now $49.5k. On balance-trailing, the floor still updates only on closed P/L.
Scenario
Same account climbs to $52.5k closed balance — the trailing locks at $50k (starting + drawdown distance) and becomes static.
Outcome
Drawdown stops trailing; further profits build a permanent buffer.
Frequently asked questions
Is trailing drawdown based on balance or equity?
Does the trailing ever stop?
Why is trailing considered harder than static?
Is trailing measured intraday or end-of-day?
What's a typical trailing distance?
Related rules
Static Drawdown
A static drawdown is a fixed maximum loss measured from your starting balance, not from any later high. Unlike a trailing limit, it never moves up as you become profitable, so your buffer can only grow. Most traders prefer static rules because they make risk planning predictable and reward consistent, long-horizon performance.
Profit Target
A profit target is the percentage gain you must reach in an evaluation phase to advance or get funded. Most one-step challenges set targets between eight and ten percent, two-step models five to ten percent per phase. Hitting it without breaking any other rule unlocks the next stage or funded status immediately.