What is Trailing Drawdown?
A maximum-loss floor that follows the account's peak equity upward — so giving back profit can breach it even while still in profit.
A trailing drawdown is a maximum-loss limit that moves. Unlike a static drawdown, which is a fixed floor set once, a trailing drawdown follows the account's highest equity (or balance) upward as the trader makes profit.
The consequence catches many traders. Start a $100k account with a $90,000 floor; push equity to $105,000 and the floor trails up to roughly $95,000. Now a drawdown back to $94,000 breaches the account — even though the trader is still $4,000 in profit overall. The buffer the trader thought they had has moved up under them.
Firms differ in two ways: whether the floor trails on closed balance or on live equity (equity-based is stricter, since open floating profit moves it), and whether it stops trailing once it reaches the initial deposit. Confirm both before the first trade — misreading a trailing drawdown is one of the most common ways to fail a challenge.