What is a high-water mark?
Quick answer
A high-water mark is the highest value an account has reached. In prop trading it is the reference for trailing drawdown, whose floor sits a set distance below it, and in some payout models profit is only paid on gains above the previous high-water mark. It only ever moves up.
Detailed answer
The high-water mark records the best point an account has achieved.
Uses in prop firms
- Trailing drawdown: the floor follows the high-water mark.
- Payouts: some firms pay only on new profits above the last peak.
- Performance tracking: distance from the peak shows current drawdown.
Balance or equity
The high-water mark can be measured on closed balance or on equity including open trades. Equity-based peaks are stricter, because a brief floating profit sets a new peak.
Example
An account starts at $100,000, rises to $104,500 in equity, then falls to $102,000. The high-water mark stays $104,500. A 5% trailing floor is $99,275.
Locking
Many trailing rules stop the high-water mark from raising the floor beyond a lock level, such as the starting balance.
On PropExecutor
The trailing drawdown rule tracks peak equity on every tick, and an optional lock percentage on the starting balance stops the floor rising past that level.
PropExecutor team · Updated
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