Static drawdown, and why the floor never moves

Two firms can advertise the same maximum loss percentage and mean completely different things by it. The word that decides which one you are dealing with is trailing or static, and it is usually written somewhere easy to skip.

Trailing: the floor follows you up

With a trailing limit, the level you must not fall below rises as your account rises. Make $500 and the floor moves up by $500 behind you. The consequence surprises people the first time it happens: you can be breached while still in profit overall, because what the rule measures is the distance back from your best moment, not from where you began.

Static: the floor is set once

Ours is static. It is calculated from the balance your account started with, and it does not move afterwards. Every dollar of profit you make is a dollar of extra distance between you and the line.

What that changes day to day

• A good run genuinely buys you room. Under a trailing rule it buys you very little, because the room moves with you.
• You can work out the lowest value your account is allowed to reach once, at the start, and write it down. It will still be true in week six.
• Giving back part of an open profit is not, in itself, a breach. Under a trailing rule it can be.

It does not replace the daily limit

These are two separate rules and both apply. The maximum loss is the floor for the whole account; the daily loss limit is a fresh allowance each day, and it is the one that ends most evaluations. There is a separate post on that.

The exact percentage differs by model — see Trading Rules for the one that applies to your account.