Maximum drawdown
Maximum drawdown is the overall loss limit on a challenge or funded account — commonly 10% of the starting balance. If equity falls below the floor at any point, the account is breached.
In its static form the floor never moves: a $100,000 account may never see equity below $90,000, no matter how high it climbed first. The trailing drawdown variant instead raises the floor as your equity makes new highs, and the end-of-day drawdown variant checks the floor only at the daily close.
Like the daily limit, it is commonly measured on equity, so floating losses count. The difference is scope: the daily loss limit resets each day, while maximum drawdown is cumulative for the life of the account and never resets. An account can die of one terrible day or of a slow bleed across weeks.
Example
A $100,000 account with a static 10% maximum drawdown has a permanent floor at $90,000. Grow the account to $107,000 and there is now $17,000 of room above the floor. Under a 10% trailing version, the same $107,000 peak would have moved the floor up to $97,000 — the same headline percentage behaves very differently, which is why the drawdown type matters more than the number. The variants and their consequences are compared in drawdown types explained.