Category: Prop Firm Trading | Last Updated: April 2026

"Drawdown" is one of the most important concepts to understand when trading a prop firm account — but the specific mechanics vary significantly across firms. This article explains the three most common drawdown rule types so you can understand what your prop firm is measuring. For the exact rules that apply to your account, always refer to your firm's official documentation.

What Is Drawdown?

Drawdown is the maximum amount your account balance can decrease from a reference point before the prop firm closes or restricts your account. The reference point and how it's calculated is what differs across rule types.

End-of-Day (EOD) Drawdown

• Drawdown is measured against your account balance at the end of each trading day
• Intraday fluctuations do not count against you — only where your balance finishes the day matters
• This gives more breathing room during the session for strategies that can have intraday dips before recovering

Example: $50K account with a $2,500 EOD drawdown limit. Your floor is $47,500 at the end of the day. If your balance dips to $46,000 intraday but recovers to $48,000 by the close, you haven't breached the limit.

Trailing Drawdown

• The drawdown floor moves up as your account hits new peaks, but never moves back down
• Each new high-water mark locks in a higher floor
• Early profits effectively raise your drawdown floor permanently (until/unless it hits a cap, which some firms set)

Example: $50K account with $2,500 trailing drawdown. Initial floor: $47,500. If your balance grows to $52,000, your new floor becomes $49,500. Even if you drop back to $50,000 afterwards, the floor stays at $49,500.

Important: Some firms calculate trailing drawdown intraday (using the highest unrealized P&L reached at any point), while others trail only end-of-day (using the highest end-of-day balance). These two variations behave very differently — check your firm's specific rules.

Static Drawdown

• The drawdown floor is fixed at a set amount below your starting balance and never changes
• It does not move up as your account grows
• Gives the most predictable risk measurement of the three

Example: $50K account with $2,500 static drawdown. Floor is $47,500 — always — regardless of whether your balance grows to $60K or drops to $48K.

How to Know Which One Applies to You

The drawdown type — and the exact dollar amount — is set by your prop firm and typically depends on your account size and the specific plan you purchased. You'll find this information in:

• Your prop firm's account rules / documentation page
• Your welcome email when you opened the account
• Your prop firm dashboard (often displayed alongside your current balance)

If you can't find it or aren't sure which rule applies, contact your prop firm directly — they're the authoritative source. Vector does not interpret firm-specific drawdown rules.

Bottom Line

EOD, trailing, and static drawdowns each measure risk differently — EOD looks only at daily closes, trailing ratchets upward as your account grows, and static stays fixed. The exact rules, dollar amounts, and variations (intraday vs. EOD trailing, for example) are defined by your prop firm. Read their documentation and ask them directly for any clarification about how your specific account is measured.