Max drawdown in prop firms
Max drawdown, or maximum loss, is the most a prop firm account may lose in total, commonly 8% to 10%. Touch the floor once and the account is breached.
On a $100,000 account with a 10% max drawdown, equity must never touch $90,000 if the rule is static. If it is trailing, the floor rises with your highest equity, so after reaching $104,000 it sits at $94,000. Open losses count.
Static vs trailing max drawdown
| Type | Floor on $100,000 at 10% | After equity peaks at $104,000 |
|---|---|---|
| Static | $90,000 | $90,000 |
| Trailing (real time) | $90,000 | $94,000 |
| End-of-day trailing | $90,000 | Moves only on the daily close |
Max drawdown: static vs trailing
Tap your account and the max loss, then slide to the highest your equity has reached. Compare where the floor sits under each type.
Account size
Max loss
Highest equity so far
How to budget it
Treat the allowance as capital you spend one stop at a time. With $10,000 of room, $1,000 risk per trade survives ten straight losses; $500 survives twenty. FundedLot sizes signals so one stop uses at most a tenth of the max loss. The daily loss limit sits inside this one and usually breaks first; both are compared in prop firm drawdown rules explained.
FAQ
What is max drawdown in a prop firm?
The largest total loss the account may take, commonly 8% to 10% of the starting balance. Hitting it closes the account.
Is max drawdown based on balance or equity?
Usually equity, so open losses count. Some end-of-day variants use the closing balance.
Does the trailing drawdown ever stop moving?
At many firms it stops once the floor reaches the starting balance; after that it behaves like a static floor.