What is a trailing drawdown?

A trailing drawdown moves your cut-off balance up every time your account makes a new high, and never moves it back down. A profitable morning permanently raises the floor you have to stay above for the rest of the account's life.

How is a static drawdown different?

A static drawdown is a fixed balance set when the account opens. It does not move whatever you make, so profit only ever adds cushion.

Does a trailing drawdown stop trailing?

At most firms it stops once the cut-off reaches your starting balance, which means the account can no longer lose money overall. Until that point every new high tightens the room you have.

Trailing drawdown calculator

Two firms can both advertise a “$2,000 drawdown” and mean completely different things. Put your own numbers in and see where each type actually closes the account — no sign-up, nothing stored.

Your account

Starting balanceHighest balance reachedThe high-water mark, not today's balance.Current balanceMax drawdown

Where the account fails

Trailing drawdown

Account fails at

$50,000

Room left

$1,000

Your cut-off has reached the starting balance, so it stops trailing here — the account can no longer lose money overall.

Static drawdown

Account fails at

$48,000

Room left

$3,000

Fixed when the account opened. Profit only ever adds cushion.

On identical rules, the trailing version fails $2,000 higher than the static one — that is $2,000 of room the headline number never mentions.

The formula

Static: cut-off = starting balance − max drawdown. Fixed for the life of the account.

Trailing (EOD or intraday): cut-off = min(starting balance, high-water mark − max drawdown). The high-water mark is whatever your peak balance was last — an EOD-trailing account updates that peak once at the end of each day; an intraday-trailing account updates it continuously, including on unrealised open profit. Once the cut-off reaches the starting balance it stops climbing.

Worked example

$50,000 starting balance, $2,000 max drawdown, balance peaks at $51,000.

Static cut-off: $48,000 — never moves.
Trailing cut-off: $49,000 — locked $1,000 higher than static, purely because the account made a new high.

How to read this

A static drawdown is a fixed balance set when the account opens. It does not move, so every dollar of profit is genuine cushion.

A trailing drawdown follows your high-water mark up and never comes back down. Make $500 in the morning and give it back in the afternoon, and you end the day flat on balance but $500 closer to failing. At most firms it stops trailing once it reaches your starting balance — the point where the account can no longer lose money overall.

Firms also differ on when the trail updates — some at the end of each day, some on every tick of unrealised profit. Intraday trailing is the harshest version: a spike you never banked can still move your cut-off. See the glossary for the rest of the vocabulary, or compare which firms use which.