Static Drawdown: The Fixed Loss Limit, Defined

Static Drawdown: The Floor That Never Moves

By PropTrader1 2 min read Published October 28, 2026

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A static drawdown is a prop firm loss limit fixed at your starting balance that never moves, no matter how much profit you make. On a $100,000 account with 10% static drawdown, your equity floor is $90,000 on day one and $90,000-equivalent forever (rising only if the firm's scaling plan raises the balance itself).

It is the most predictable of the drawdown types and the friendliest to swing-style traders: profits you bank never come back to haunt you as a tighter floor. The trade-off is that firms offering static limits usually pair them with lower account sizes or stricter daily limits, because the firm carries more tail risk.

Worked example: you run to $125,000, then give back $30,000. Under a static 10% you are fine - the floor stayed at $90,000 and you are at $95,000. Under a 10% trailing floor locked at your peak, you breached at $112,500.

The head-to-head: static vs trailing drawdown; where futures firms land on this: static drawdown in futures.

Plain-language material on leveraged-trading risk is maintained by the ESMA investor corner.

Part of the rules & drawdown cluster and the full prop firm glossary.

Frequently Asked Questions

Why is a 50% drawdown harder to recover than a 10% one?

A 50% drawdown requires a 100% gain to recover, while a 10% drawdown only needs 11.1%. Recovery math is exponential. At 30% drawdown you need 42.9% to break even. This is why prop firms cap drawdown at 10-12% rather than higher percentages.

What is the 3-5-7 rule in forex?

The 3-5-7 rule suggests risking 1-3% per trade, keeping total open risk at 5% or less, and limiting single market exposure to 7%. It is a general risk guideline, not a prop firm rule, but following it naturally keeps you within most max drawdown limits.

What is a good maximum drawdown?

For prop firm trading, keeping your actual drawdown under 5% is excellent. Most firms allow 10-12%, but staying well below the limit demonstrates strong risk management and gives you a buffer for unexpected market events.

Is maximum drawdown calculated on balance or equity?

It depends on the firm and drawdown type. Static drawdown is typically calculated on starting balance. Trailing drawdown follows your highest equity. Some firms include floating losses in their calculation, making equity the relevant measure.

What happens when you breach maximum drawdown?

Breaching maximum drawdown results in immediate and permanent account closure. All positions are closed automatically, the challenge is terminated, and there is no refund or appeal. It is the final rule with no second chances.

What is the difference between daily drawdown and maximum drawdown?

Daily drawdown resets every day and limits your loss within a single session. Maximum drawdown is cumulative across the entire challenge or funded period. You can breach max drawdown through many small daily losses that accumulate over time.