# What is Trailing drawdown?

> A trailing drawdown is a maximum loss limit that moves up as the account reaches new highs, so the breach level follows the trader's peak rather than staying fixed.

- Source: https://pipvalley.com/glossary/trailing-drawdown
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

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.

## Why it matters

Trailing rules let you offer cheaper or faster programs with less exposure, but they are the rule most often described as unfair in reviews, usually because traders did not understand what the floor trails. Say exactly whether it trails balance or equity, intraday or end of day, and when it stops, and show the live floor in the dashboard.

## Example

Starting balance $50,000 with a $2,500 trailing drawdown on equity. Equity peaks at $51,800, so the floor moves to $49,300. If trailing stops at the starting balance, the floor can never rise above $50,000. Illustrative only.