Static vs Trailing Drawdown: What Changes for Your Prop Firm Account

Static vs trailing drawdown is one of the most important rule differences between prop firm accounts, and one of the easiest to overlook. Both set the maximum amount your account may lose before it is closed. The difference is whether that limit stays where it started or moves up behind your profits. That one detail decides how much room you really have after a good week.

This guide explains both types, runs the same trades through each one on a $100,000 account, and shows how the static drawdown works on every Core Funded account.

What a drawdown limit is

In prop trading, the drawdown limit (often called max total loss or max loss) is the lowest level your account may reach. If your equity falls below it, the account is stopped. Equity means your balance plus or minus open positions, so unrealized losses usually count.

Most firms also have a daily loss limit. That one is separate and resets every day. This article is about the overall limit, the one that applies for the whole life of the account.

The question is how that lowest level is set. There are two common answers.

Static drawdown explained

A static drawdown is calculated once, from your starting balance, and never moves.

On a $100,000 account with an 8% static drawdown, the floor is $92,000. It is $92,000 on your first day. It is still $92,000 when your account is at $110,000. It is still $92,000 if you then drop back to $100,000.

The effect is simple: every dollar of profit increases the distance between your equity and the floor. If you make $6,000, you now have $14,000 of room instead of $8,000. That buffer belongs to you, and a later pullback only uses it up if you actually lose it.

Trailing drawdown explained

A trailing drawdown follows your account upward. The floor sits a fixed amount below your highest point, and when you reach a new high, the floor rises with it. It never moves back down.

On a $100,000 account with an 8% trailing drawdown, the floor starts at $92,000, just like the static version. But when your account reaches $106,000, the floor moves to $98,000. Your room stays at $8,000, no matter how much profit you have made.

Trailing drawdowns come in different versions. Some follow your highest closed balance, others follow your highest equity, which includes open profit that you have not taken yet. Some stop trailing once the floor reaches the starting balance. The core idea is the same in all of them: profits don't add to your room the way they do with a static limit.

The version that tracks equity is the strictest. If a trade is up $3,000 and then turns around before you close it, the floor has already moved up by $3,000 even though you never banked that profit.

Static vs trailing drawdown: the same trades, two results

Here is one sequence of trades on a $100,000 account with an 8% limit. The trailing version in this example follows the highest equity.

After the good week, both accounts look the same on the balance sheet. But with the trailing limit, the $6,000 profit has bought no extra room. A $5,000 pullback then leaves only $3,000, and one more losing day of $3,500 ends the account, even though it is still close to where it started.

With the static limit, the same losing day leaves $5,500 above the floor, and you keep trading.

Why the type of drawdown matters for your trading

Position sizing

With a static drawdown, you can size positions based on a known distance to a fixed number. With a trailing drawdown, the distance shrinks again every time you hit a new high, so you have to recalculate after each good run.

Holding winners

A trailing limit that follows equity punishes letting winners run. Open profit raises the floor, and if the trade gives back part of its gain, you lose room you never had in your balance. A static limit doesn't care where a trade peaked; only where your equity is now.

Recovering after a drawdown

With a static limit, the floor never comes closer when you win. Early profit builds a cushion for later losing streaks. With a trailing limit, the cushion is capped at the original percentage, so a long losing streak after a strong run can still close the account.

Static drawdown at Core Funded

Core Funded uses a static drawdown on every account type. The max total loss is set once from your starting balance and does not move up with your profits, during the challenge or on the funded account.

A few details worth knowing:

• Open positions count. Your equity, including unrealized losses, must stay above the floor.
• If equity falls below the floor, the account is stopped immediately.
• The static limit applies in the 1-Step challenge, the 2-Step challenge and on the funded account. On a $100,000 2-Step, the floor of $92,000 applies in both phases.

How the daily loss works alongside it

The daily loss limit is the one part that moves, and only once per day. At 00:00 UTC, the higher of your balance or equity is taken, and the fixed percentage of your original balance is subtracted. On a $100,000 2-Step account with a balance of $104,000 at midnight, equity must not drop below $99,000 that day ($104,000 minus $5,000). The next day it is recalculated.

So there are two checks: a daily one that resets, and a static one that never moves. The 2-Step Flex has no daily limit at all, only the 12% static floor. You can read all limits in detail in the trading rules.

How to trade with a static drawdown

• Know your floor in dollars. Write it down when the account starts. On a $50,000 1-Step, 6% is $3,000, so the floor is $47,000.
• Measure risk against current room. Your room is equity minus the floor. Early on, before you have built profit, size positions so that a few losing trades can't take you near the floor.
• Use the buffer you earn. Once you are in profit, the extra room is real and stays. You don't have to trade more conservatively after a good week, as you would under a trailing limit.
• Watch the daily limit separately. A static floor far away doesn't help if one bad session breaks the daily limit.