How does a trailing drawdown work in a prop firm evaluation?
A trailing drawdown is a loss limit that follows your account up but never comes back down. On a $50,000 evaluation with a $2,000 trailing drawdown, the account ends if the balance touches $48,000. If your best balance reaches $51,000, the floor moves up to $49,000 and stays there, even if the balance falls later. Some firms stop moving the floor once it reaches the starting balance.
How does the floor move day by day?
This made-up end-of-day example uses a $50,000 account and a $2,000 trailing drawdown.
| Day | Balance at the close | Best close so far | Loss floor |
|---|---|---|---|
| Start | $50,000 | $50,000 | $48,000 |
| Day 1 | $50,800 | $50,800 | $48,800 |
| Day 2 | $51,000 | $51,000 | $49,000 |
| Day 3 | $50,400 | $51,000 | $49,000 |
| Day 4 | $49,100 | $51,000 | $49,000 |
On Day 4 the balance is $900 below the start, but only $100 above the floor. One more small loss ends the account.
What is the difference between end of day and intraday?
An end-of-day floor moves only after the market closes, based on your closing balance. An intraday floor moves while your trade is open, based on your best open gain.
Made-up example: your trade is up $600, then comes back, and you close it up $100. If that is your new best balance, an end-of-day floor rises by $100. An intraday floor rises by $600. A winner that comes back can raise an intraday floor on you.
How should I size for a trailing drawdown?
Size for the distance to the floor, not the account size. A $50,000 account with a $2,000 floor is a $2,000 account for risk.
At 1 percent risk, that is $20 per trade. On one Micro Nasdaq 100 (MNQ) contract at $2 a point, $20 is a 10-point stop.
Where do I find my firm's rule?
Read the firm's own rules page. Look for the drawdown type, when it updates, and whether it locks at your starting balance.
Prop Firms 101 lists the drawdown rules for seven firms, taken from each firm's pages.
Common mistakes
- Sizing for the $50,000 account instead of the $2,000 floor.
- Not knowing if your floor is end of day or intraday.
- Letting a big open winner come all the way back on an intraday floor.
- Thinking a good week protects you. One touch of the floor ends the account.
Sources
- Topstep: Trading Combine parameters
- Apex Trader Funding: end-of-day evaluations
- Tradeify: Select evaluation accounts
Last reviewed: 2026-10-16
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Disclosure: HTA has affiliate links with some prop firms (Apex Trader Funding, Purdia Capital and Tradeify). If you buy through those links, HTA may earn a fee. No firm paid for, reviewed or approved this page. Rules are taken from each firm's own pages, and the firm's page always wins.
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Mahalo for reading and trade well!
Glenn & Reid | Hawaiʻi Trading Academy
Risk disclaimer: Education only. Not financial advice. Trading futures involves substantial risk of loss. Futures are not suitable for every investor, and you can lose more than your initial deposit. Examples on this page use made-up numbers to teach the math. Past performance does not guarantee future results. Hawaiʻi Trading Academy provides education only. We are not financial advisors, and nothing on this page is a recommendation to buy or sell any financial product. HTA is not affiliated with CME Group or any exchange or agency named here. Times, rules and dates can change; check the source before you trade.
