Trailing vs end-of-day vs static drawdown
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Breaking the maximum drawdown ends an evaluation, so it pays to know exactly how a firm calculates it. The same dollar figure, say $2,000, can behave very differently depending on whether the limit is static, trails end-of-day balances or trails intraday highs.
The three methods
- Static drawdown
- The failure level is fixed: starting balance minus the drawdown amount. It never moves, however much profit you make.
- End-of-day (EOD) trailing drawdown
- The failure level follows your highest end-of-day balance. It is recalculated once a day, after the close, so profits made and given back within a single day do not move it.
- Intraday trailing drawdown
- The failure level follows the highest balance your account reaches at any moment, including open profit during the day. A trade that runs up and then reverses can raise the level and then hit it, all within one session.
Some firms stop trailing once the failure level reaches the starting balance, so it cannot rise any higher. Some measure the balance including open positions and others only closed trades. These details are firm-specific: read the firm's official rules.
A worked example (hypothetical figures)
The numbers below are made up to illustrate the three methods. They do not describe any real firm or trader.
Starting balance $50,000, drawdown amount $2,000. Three trading days:
| Day | Intraday high | Intraday low | End-of-day balance |
|---|---|---|---|
| 1 | $50,800 | $49,900 | $50,600 |
| 2 | $51,200 | $50,300 | $50,400 |
| 3 | $50,700 | $49,100 | $49,400 |
| Day | Static | EOD trailing | Intraday trailing |
|---|---|---|---|
| 1 | $48,000 | $48,000 | $48,800 |
| 2 | $48,000 | $48,600 | $49,200 |
| 3 | $48,000 | $48,600 | $49,200, breached by the $49,100 low |
- Static: the level stays at $50,000 − $2,000 = $48,000. The lowest balance, $49,100, never reaches it.
- EOD trailing: day 1 starts from the $50,000 starting balance, so the level is $48,000. Day 1 closes at $50,600, a new high close, so from day 2 the level is $48,600. Day 2 closes lower, so the level stays at $48,600 on day 3. Not breached.
- Intraday trailing: the day 1 high of $50,800 lifts the level to $48,800; the day 2 high of $51,200 lifts it to $49,200. On day 3 the balance falls to $49,100, below $49,200, so the account fails, even though it never closed a day below $50,400 before then.
The example assumes each day's high came before its low. Under intraday trailing, the order matters: if the low comes first, the level may not yet have risen.
What to check in a firm's rules
- Which method applies, and whether it is different in the evaluation and the funded stage.
- Whether open (unrealized) profit counts toward the high.
- Whether the level stops trailing at some point, for example at the starting balance.
- Whether touching the level fails the account or only falling below it.
Try your own numbers in our drawdown calculator. For an example of how we record one firm's drawdown rules, see the plan tables in our TradeDay review.