A prop firm drawdown is the loss threshold that closes your account, and every other drawdown term is a variation on where that threshold sits and when it moves. This hub defines each type, links the full guide for each, and shows which combinations are hardest to trade. Definitions and cross-references checked 28 October 2026.
Key Takeaways
- Maximum drawdown is the whole leash; the daily loss limit is the per-day leash. You can breach the maximum through small daily losses that never breach the daily limit.
- Static drawdown never moves. Trailing drawdown follows your profits upward. End-of-day trailing only updates at the daily close, which is far more forgiving than tick-by-tick trailing.
- The consistency rule is not a drawdown, but it gates your payout the same way: your best day is capped as a share of total profit.
The Drawdown Terms, Defined
Prop firm drawdown. The loss threshold at which the firm closes your account. The full maximum drawdown guide covers the math and the recovery percentages.
Maximum drawdown (max DD). The cumulative loss limit across the whole challenge or funded account, usually 10-12% of the starting balance. Hitting it is final: positions close, the account terminates, no refund. Guide to maximum drawdown.
Static drawdown. A maximum drawdown fixed to the starting balance that never moves. On a $100,000 account with 10% static drawdown, your floor is $90,000 for the life of the account. The most predictable type. Static vs trailing compared.
Trailing drawdown. A maximum drawdown that follows your equity high-water mark as it rises. Grow the account to $110,000 and a 10% trailing floor moves to $99,000, so profits you already banked can be eaten by the threshold. This is the drawdown that catches traders out. How trailing drawdown works.
End-of-day (EOD) drawdown. A trailing drawdown that only updates its floor once per day, at the close. Intraday spikes above the high-water mark do not count until they are locked in at the daily close. EOD vs intraday drawdown.
Intraday (tick-by-tick) drawdown. The strictest trailing variant: the floor updates with every tick of new equity, so a momentary spike counts immediately. Most common in futures evaluations.
Daily loss limit. The most you can lose in one trading day before the account is closed, usually 4-5% of the starting balance, resetting at the daily rollover. The daily loss limit explained.
Daily loss limit vs maximum drawdown. One is per-day, one is cumulative. You can breach the maximum drawdown through a run of days that each stayed inside the daily limit, which is why budgeting only against the daily number fails.
Consistency rule. Not a drawdown but a payout gate in the same spirit: your best trading day must stay below a set share of your total profit, commonly 30-40%, before a reward is approved. The consistency rule in full.
Prop firm drawdown rules. The full set: profit target, daily loss limit, maximum drawdown, minimum trading days and the restricted behaviours. Every firm's exact combination differs. Challenge rules explained.
Weekend holding. Whether positions may stay open over the weekend. Firms that forbid it do so because of the Sunday-open gap risk; a gap through your stop can breach a drawdown without a tick trading in between. Firms that allow weekend holding.
Prop firm regulation. Most retail prop firms are not regulated as brokers because they run simulated accounts and pay rewards from their own funds - a contrast regulators such as the ESMA investor corner draw constantly for leveraged retail trading. What it means for your legal position is covered in prop firm regulation, updated.
How the Rules Combine
The type of maximum drawdown matters more than its size. A 10% trailing tick-by-tick floor is harder to survive than a 6% static one, because the trailing floor follows you into every new high and a single spike can lock it in. When you compare firms, compare the type first, the size second.
Then read the daily limit against the maximum. If the daily limit is 5% and the maximum is 10%, two bad days can end you. If the maximum is 10% but the daily limit is 3%, the firm is forcing you to lose slowly, which gives you room to stop and reset your process.
Our full prop firm glossary defines the rest of the vocabulary, and the payouts hub covers what happens after you pass.
