What is a trailing drawdown?

A loss limit that follows your account's high-water mark upward but never moves back down. If the buffer is $2,000 and your peak equity is $1,000 up, the breach level has risen by $1,000 too.

Does trailing drawdown follow open or closed profit?

It depends on the firm. Intraday trailing follows unrealized peaks tick by tick, so an open winner you give back still raises the floor. End-of-day trailing only updates on the daily settlement, which is far more forgiving.

When does the trailing drawdown stop trailing?

Most firms lock it once the buffer reaches the starting balance — after that it becomes a fixed floor at your original balance. Confirm the exact lock point in the firm's rules.

How do I size trades so drawdown never fails me?

Risk one fifth of the daily loss limit per trade and halve that size once you are more than 60% of the buffer above the starting balance. Contracts = dollar risk / (stop in points x point value).

Trailing Drawdown Explained (With Prop Firm Examples)

The single rule that fails more evaluation accounts than any other, worked through with real numbers.

The three drawdown types

Static drawdown: a fixed floor below the starting balance. Easiest to trade, rarest to find.
End-of-day trailing: the floor rises with each daily settlement high. Open profit you give back the same day costs you nothing.
Intraday trailing: the floor follows unrealized equity tick by tick. Every open winner you fail to bank permanently tightens your buffer.

Worked example

Starting balance $50,000, trailing buffer $2,000, so the initial breach level is $48,000.

Day 1 you close +$800. Peak equity $50,800, breach level rises to $48,800. Room left: $2,000.
Day 2 you run +$1,200 open and give it all back to flat. Under intraday trailing, peak equity was $52,000 — breach level is now $50,000. Room left: exactly $0 against your current balance, on a day you lost nothing.
Under end-of-day trailing, the same day leaves the breach level at $48,800. Room left: $1,200.

That difference is why the drawdown type matters more than the profit target, the price of the evaluation, or the size of the account.

The sizing rule that survives it

Base risk: daily loss limit ÷ 5, fixed. On a $1,000 daily limit that is $200 per trade.
Contracts: $200 ÷ (stop in points × point value). A 4-point MES stop at $5 per point = $20 per contract, so 10 contracts maximum — and take fewer if the spread is wide.
Peak brake: once you are more than 60% of the buffer above the start, halve size until the drawdown locks.
Bank the runner: under intraday trailing, scale half at your first target. Unbanked profit is borrowed buffer.
Daily stop: two losers, done. Three losing days in a week, drop to half size for the next week.

Questions to ask before you buy

Does the drawdown trail on closed balance or unrealized equity?
At what point does it stop trailing?
Is the daily loss limit measured on realized P&L or equity low?
Does the platform auto-flatten at the limit, or does a breach end the account?
Is there a consistency cap applied at payout, and what percentage?

FAQ

What is a trailing drawdown?: A loss limit that follows your account's high-water mark upward but never moves back down. If the buffer is $2,000 and your peak equity is $1,000 up, the breach level has risen by $1,000 too.
Does trailing drawdown follow open or closed profit?: It depends on the firm. Intraday trailing follows unrealized peaks tick by tick, so an open winner you give back still raises the floor. End-of-day trailing only updates on the daily settlement, which is far more forgiving.
When does the trailing drawdown stop trailing?: Most firms lock it once the buffer reaches the starting balance — after that it becomes a fixed floor at your original balance. Confirm the exact lock point in the firm's rules.
How do I size trades so drawdown never fails me?: Risk one fifth of the daily loss limit per trade and halve that size once you are more than 60% of the buffer above the starting balance. Contracts = dollar risk / (stop in points x point value).

Apply it in the Topstep Combine review or the step-by-step challenge plan.