Two funded traders both tell you their account carries a 6 percent maximum drawdown. One of them has $6,000 of room. The other has $600 and does not know it.
Same number. Different rule.
Maximum drawdown is the only parameter in a proprietary trading agreement that can close your account while you are up on the month. Most candidates read it once, note the percentage, and spend the rest of their preparation on the profit target. That order is backwards. The profit target decides whether you get paid. The drawdown rule decides whether you are still there to collect.
Same Number, Different Account
Take a $100,000 funded trading account evaluation and apply the two common structures.
- Static drawdown measures from your initial balance and never moves. An 8 percent static floor sits at $92,000 on day one and sits at $92,000 in month six. Trade the account to $115,000 and the floor is still $92,000. You are carrying $23,000 of loss tolerance.
- Trailing drawdown measures from your highest recorded equity. A 6 percent trailing floor starts at $94,000, which sounds close enough. Then you make money, and the floor comes with you.
Push that account to $110,000 and the floor moves to $103,400. You are up $10,000 and you may only return $6,600 of it. Give back two-thirds of a winning run and the account closes while you are still $3,400 ahead of where you started.
That is the mechanism worth naming: the drawdown that follows you up. It rises with every new equity high and it never comes back down. The more you earn, the less you are permitted to lose, which is precisely the opposite of how risk capacity works in every other part of finance.
The Floor That Only Moves One Way
Two accounts can both advertise trailing drawdown and behave nothing alike, because the word hides two further decisions that nobody puts on the pricing page.
EOD trailing versus intraday trailing
The industry uses two formulas and one label, which is where most of the confusion starts.
- EOD trailing drawdown updates the high-water mark once per day, on your closed balance, after the session settles. What happens inside the day does not move the floor. FTMO’s 10 percent maximum loss works this way on its one-step account, recalculated at midnight against the highest previous closing balance. On its two-step account the same 10 percent is static. One firm, two formulas, one number.
- Intraday trailing drawdown updates continuously from your peak equity, so unrealised profit counts. Hyrotrader’s 6 percent uses this formula, the most aggressive of the three.
The difference is not academic. Open a position, watch it run $5,000 in your favour, then close it at breakeven because the move faded. Under EOD trailing, nothing happened. Under intraday trailing, your peak is now $105,000 and your floor has permanently moved to $98,700. You booked no profit and lost $1,300 of buffer.
An EOD trailing drawdown of 10 percent can leave you more room than an intraday trailing drawdown of 6 percent. The pricing page will tell you none of that.
When it stops trailing
A well-constructed trailing rule stops following once the floor reaches your initial balance. At that point the firm’s capital is protected and further trailing serves no risk purpose. A rule that trails indefinitely is not managing the firm’s downside. It is managing yours.
Both decisions come down to the same thing: whether your floor is anchored to a starting balance you can write down, or to a high-water mark that tightens exactly when your position sizing has grown to match your new equity.
Three Questions Before You Pay an Evaluation Fee
The percentage on the pricing page is close to useless on its own. Before you commit an entry fee, get an answer to each of these in one sentence.
- Is it EOD or intraday trailing? If nobody will say, assume intraday, and assume every unrealised spike costs you buffer permanently.
- Does it stop trailing at breakeven? If it trails forever, your loss tolerance shrinks for the life of the account.
Is the rule published, or does it live in a support ticket? This is the question most traders skip and the cheapest one to check. A firm with a standalone, public rules page has committed to a number in writing. A firm that discloses parameters only after payment has kept the option to interpret them later. Consistency rules are where this usually goes wrong: several firms cap the share of total profit that may come from your best day, and for some of them the actual threshold is easier to find in third-party reviews than in their own documentation. A rule you cannot read is a rule you cannot plan around, and it will find you at the worst possible moment.
Apply that criterion before you compare prices. Klein Funding and Breakout both run 6 percent static floors on their one-step accounts, and Breakout publishes the $94,000 equity limit that a $100,000 account carries. Hyrotrader starts traders on 6 percent intraday trailing and sells a static version as a paid add-on. A prop firm with static drawdown rules published on its own page, in Mubite’s case an 8 percent static maximum and a 4 percent static daily limit on the $982.80 evaluation, is making a claim you can verify before you spend anything.
Note what that criterion does not settle. Plenty of firms, Mubite included, sell parameter upgrades at checkout: the static maximum can be raised from 8 to 10 percent as a paid add-on, which is a different proposition from paying to escape a trailing formula altogether. A published rules page does not make a firm cheap or generous. It makes the trade legible, so you can price the upgrade instead of discovering the base terms after you have paid.
Two Consequences Worth Doing the Maths On
Under a trailing rule, profit is expensive
Differentiate the formula and the cost is exact. A 6 percent trailing floor sits at 94 percent of your highest equity, which means every dollar of new equity high raises your floor by 94 cents. Earn a thousand, keep sixty dollars of additional breathing room.
That is the trade a trailing account offers and almost nobody states it in those terms. It is not a penalty for losing. It is a charge levied on winning, collected at the moment you are least likely to notice, and it never refunds when you give the gain back.
The daily limit binds before the maximum does
A 4 percent daily limit on $100,000 is $4,000, which is half of an 8 percent maximum. Two consecutive bad sessions end an evaluation that the maximum alone would have survived, and because the daily figure resets it reads as recoverable when it is doing the most damage.
Regulators reached the same conclusion about where risk actually accumulates. FINRA’s intraday margin standards, effective June 2026, replaced the pattern day trader rules with continuous monitoring of account equity against open positions, on the reasoning that what happens inside the session is what threatens the account rather than what shows up in a daily total.
The Point
A drawdown limit is not a number. It is a formula, an anchor, and a set of conditions on when it updates. The number is the least informative part of it.
Two traders quoting the same percentage are not describing the same constraint. Some are trading against a wall. The rest are trading against a floor that follows them up, and they will find out exactly where it is at the moment they can least afford to.
Frequently Asked Questions
What is the difference between static and trailing drawdown?
A static drawdown is calculated from your initial account balance and does not change: on a $100,000 account, an 8 percent static limit fixes the floor at $92,000 permanently. A trailing drawdown is calculated from your highest recorded equity, so the floor rises each time you set a new peak. The practical effect is that a trailing rule reduces your loss tolerance as you become profitable, while a static rule leaves it constant.
Is a higher drawdown percentage always better?
Not reliably. An intraday trailing limit of 10 percent can bind harder in practice than an 8 percent static limit, because the trailing floor moves upward with every unrealised peak while the static floor does not move at all. EOD trailing sits between the two, since it only updates on closed balance once a day. The structure of the calculation matters more than the headline percentage, which is why comparing firms on the number alone produces misleading conclusions.
How do I find out which rule my prop firm uses?
Look for a dedicated, public rules page rather than a marketing summary or a support FAQ. It should state the calculation basis, whether closed balance or open equity is tracked, and whether trailing stops once the floor reaches your starting balance. If those details are only available from support after purchase, treat the omission as information about the firm rather than an oversight.