Drawdown Types: Static vs Trailing
“Max drawdown” sounds like one thing. It is two very different rules, and picking the wrong mental model is how accounts die.
Static drawdown
What it says: you can’t lose more than X% from your starting balance.
What it means: your loss limit is a fixed line in the sand. If the limit is 10% and you start at $100,000, the floor is $90,000. Profit doesn’t move it.
Who uses it: FTMO, FundingPips, FundedNext, most forex/CFD evaluation firms.
Why it matters: it’s forgiving. A drawdown that recovers doesn’t permanently damage your limit, and a big win doesn’t raise your floor.
Trailing drawdown
What it says: you can’t lose more than X% from your highest point (your high-water mark).
What it means: the limit follows your equity up. Win $10,000 and the floor rises with you. Give it all back and you hit the floor anyway - but now from a higher point.
Two sub-variants matter:
- End-of-day trailing, the high-water mark is measured at daily close. Intraday swings don’t move it.
- Intraday trailing, the high-water mark includes intraday equity peaks. A position that floats +$2,000 and retraces raises your floor even if you close flat. This is the trap.
Who uses it: Apex (intraday trailing - the strictest), Tradeify (Dynamic Drawdown - profit-locking), Topstep (trailing drawdown on funded accounts), most futures evaluation firms.
The gotcha
The words “trailing drawdown” hide the difference between end-of-day and intraday calculation. Always ask which one. The intraday version is the single most common cause of “I was in profit and still blew the account” stories in futures evaluations.
Questions to ask before buying
- Static or trailing?
- If trailing: end-of-day or intraday?
- When does the floor reset, never, after a payout, after a reset?
- Does a profit drawdown reset the trailing floor to the new high, or stay at the starting balance?
A firm that can’t answer these in two sentences is selling you a puzzle. Note it.