GLOSSARY · PROP FIRMS

What is Trailing Drawdown?

A trailing drawdown is a prop firm loss limit that moves up as your account reaches new highs.

Unlike a fixed limit, the trailing drawdown follows your highest balance. Intraday trailing drawdowns can follow unrealized profit on open trades; end-of-day (EOD) versions only update at the close — a critical difference covered in Module 5.

Most firms stop trailing once the limit reaches your starting balance.

EXAMPLE

$50,000 account with a $2,500 trailing drawdown. Grow to $52,000 and your floor rises to $49,500.

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