Glossary · Risk and drawdown
Trailing drawdown
- Also called
- trailing max drawdown
- intraday trailing drawdown
- trailing threshold
What it means
In a prop firm, a trailing drawdown sets the breach level a fixed distance below the highest point the account has reached. It can trail the peak closed balance or the peak equity including open profit; intraday equity trailing is the strictest form, because an open trade that runs up and comes back can raise the floor without ever being banked.
Most trailing drawdowns stop trailing at some point, commonly once the breach level reaches the starting balance, after which the limit becomes static.
Trailing drawdowns are standard at futures prop firms and common in one-step and instant funding programs, because they limit how much open profit a trader can give back.
Related terms
Read these next.
Maximum loss limit
End-of-day drawdown
Static drawdown
One-step challenge
Trader dashboard
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