Is trailing drawdown based on balance or equity?

Depends on the firm. Intraday trailing uses unrealised equity; end-of-day trailing uses closing balance. Confirm before your first trade — the two behave completely differently.

Which prop firms use static drawdown?

Static drawdown is more common among forex firms, with FTMO the best-known example. Futures programs mostly use trailing, and end-of-day trailing is the trader-friendly version.

Rules & mechanics

Trailing drawdown explained (with worked examples)

7 min readUpdated 2026-07-01

Trailing drawdown is the rule most traders think they understand and then breach anyway. The difference between intraday trailing and end-of-day trailing is worth more than a 10% difference in profit split.

Key takeaways

·Intraday trailing follows unrealised peak equity — including profit you never banked.
·End-of-day trailing only moves after the session close, based on realised balance.
·Most trailing drawdowns stop trailing once your account reaches starting balance plus the drawdown amount.
·Static drawdown is the most forgiving and is worth paying more for if you scale into winners.

Worked example: intraday trailing

A 50k account with a $2,000 trailing drawdown starts with a stop-out at $48,000. You go $1,500 up intraday — peak equity $51,500 — then close flat. Your stop-out is now $49,500. You are back at your starting balance with only $500 of room left. Two average losing trades and the account is gone despite never having a losing day.

Worked example: end-of-day trailing

Same account, same day. Because the drawdown only reflects your closing balance of $50,000, your stop-out stays at $48,000. Intraday excursions cost you nothing. This is why end-of-day trailing suits traders who let winners run and give back part of an open profit.

When trailing stops

Most firms lock the trailing floor once your balance reaches starting balance plus the drawdown value — for the example above, $52,000. From that point the floor sits at your starting balance and the account becomes far safer. Getting to the lock point is the real first milestone of a funded account, not the first payout.

How to trade under a trailing rule

Size down until the floor locks — the first $2,000 is the dangerous stretch.
Bank partials rather than holding for a full runner while the floor is live.
Track your peak equity, not your balance; the platform's P&L is not your risk number.

FAQ

Is trailing drawdown based on balance or equity?: Depends on the firm. Intraday trailing uses unrealised equity; end-of-day trailing uses closing balance. Confirm before your first trade — the two behave completely differently.
Which prop firms use static drawdown?: Static drawdown is more common among forex firms, with FTMO the best-known example. Futures programs mostly use trailing, and end-of-day trailing is the trader-friendly version.