What is the difference between static and trailing drawdown?
Quick answer
Static drawdown measures loss from a fixed point, usually the starting balance, so the floor never moves. Trailing drawdown measures loss from the highest equity reached, so the floor rises as the account makes new peaks. Trailing is stricter, because profits raise the floor.
Detailed answer
Example on a $100,000 account with a 6% limit:
- Static: the floor is $94,000 forever. If the account reaches $108,000 and falls back to $95,000, it is still alive.
- Trailing: at a peak of $108,000 the floor is $101,520. Falling to $101,000 breaches, even though the account is in profit.
Traders often find trailing drawdown frustrating unless it locks at some level. Many firms combine a static maximum loss with a trailing rule that stops trailing once the floor reaches the starting balance or a set profit.
PropExecutor originally had its maximum loss trail peak equity; it breached accounts that were in profit, so the team changed it to a static floor and made trailing drawdown a separate, optional rule with a lock level.
Which to use
Static drawdown is easier to explain and suits newer traders. Trailing drawdown with a lock protects the firm from traders who build a profit and then give it all back.
PropExecutor team · Updated
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