Static 10% limit, a $100,000 account has grown to $106,000. How much room does Mira have above the floor?

$16,000. The static floor sits at $90,000: $106,000 − $90,000 = $16,000.

Trailing 10% from the high. The account peaked at $104,000 and is now $101,000. Where is the floor?

$94,000. The floor counts from the peak: $104,000 − $10,000 = $94,000. It doesn’t follow the balance down.

Which kind of trailing is stricter on a trader?

Intraday: it moves even on floating profit. If the floor rises at every peak, even temporary profit the market takes back eats your room.

Max drawdown: static and trailing

Lesson 5 of 12 in the course “Prop Trading”. Free, with animations and a quiz.

The overall limit

Max loss, or max drawdown, is how much you can lose over the whole challenge. Usually 10%: on a $100,000 account the balance must not drop below $90,000. It’s the second way to fail, just a slow one: not one bad trade, but a series of small losses in a row.

A static drawdown

The line stays put: $90,000, that’s it. Mira makes $5,000 and the room above the line grows to $15,000. The more profit, the calmer the trading. It’s the gentlest option for a trader, and it’s the one a beginner should look for.

A trailing drawdown

Here the line creeps up after the account’s high. The account grows to $104,000 and the line rises to $94,000. It never moves back down. So profit you give back to the market eats your room. A trade went green and came back, and now there’s less room for mistakes.

End of day or real time

Trailing comes in two kinds. End of day: the line moves once a day based on the closing balance. Intraday (real time): at every new peak, even on floating profit of an open trade. The second is stricter: a trade went to +$2,000 and back to zero, and your room is already $2,000 smaller.

Where trailing stops

At many firms trailing freezes once the line reaches the starting balance. For example, a $100,000 account grows to $110,000, the line rises to $100,000 and stops there. Find this in the rules before you pay: it decides how you should trade after your first profits.

Check yourself

Static 10% limit, a $100,000 account has grown to $106,000. How much room does Mira have above the floor?
Correct answer: $16,000. The static floor sits at $90,000: $106,000 − $90,000 = $16,000.
Trailing 10% from the high. The account peaked at $104,000 and is now $101,000. Where is the floor?
Correct answer: $94,000. The floor counts from the peak: $104,000 − $10,000 = $94,000. It doesn’t follow the balance down.
Which kind of trailing is stricter on a trader?
Correct answer: Intraday: it moves even on floating profit. If the floor rises at every peak, even temporary profit the market takes back eats your room.

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