Static vs Trailing Drawdown: How Prop Firm Max Loss Really Works
Updated · 2 min read
A static drawdown is a fixed dollar floor set below your starting balance that never moves. A trailing drawdown follows your highest balance or equity upward, so the floor rises as you profit. Most trailing drawdowns stop rising once the floor reaches your starting balance. Static is more forgiving after a winning run; trailing punishes giving back open profit.
- Static: $100K account, 6% → floor $94,000 forever.
- Trailing: floor = high-water mark − X%, usually capped at the starting balance.
- End-of-day (EOD) trailing only updates the high-water mark at the daily close, so intraday peaks don't count.
- Nearly every crypto firm checks the floor against live equity, including open PnL.
- Payouts can reset, lower or permanently lock the floor. Check before withdrawing.
The four drawdown types
| Type | How the floor moves | Example ($100K, 6–8%) |
|---|---|---|
| Static | Never moves | Floor $94,000 for the life of the account |
| Trailing (intraday) | Rises with each new equity/balance high; locks at starting balance | Peak $104,000 → floor $96,000; peak $108,000+ → floor $100,000 |
| End-of-day trailing | Rises only with new end-of-day highs | Intraday spike to $106K ignored if you close at $103K |
| Hybrid / 'smart' | Trails until a threshold, then locks | Klein: trails until +3%, then locks at −3% of start |
Worked example: the trailing trap
$100,000 2-step, 8% trailing drawdown on equity
- Start: floor $92,000.
- Open trade runs to +$5,000 unrealized → equity high $105,000 → floor $97,000.
- Trade reverses and you close at +$500 → equity $100,500.
- Your buffer shrank from $8,000 to $3,500, even though you're up.
- With a static 8% floor the buffer would be $8,500.
How each firm calculates max drawdown
| Firm | Max drawdown |
|---|---|
| Breakout | 1-Step only: 6% static (Pro 5%, Turbo 3%). The 2-Step is no longer sold |
| Propr | 1-Step: static 3–6%. 2-Step: 8% trailing, capped at starting balance, resets after payout |
| Carrot Funding | Trails the high-water mark by 8–10% of starting balance; stops trailing above start |
| Crypto Fund Trader | 2-Phase: 10% overall. 1-Phase: 6% trailing that locks at initial balance |
| Klein Funding | Static (Bybit); 'Smart' trails then locks at −3%; Instant 8% trailing → 4% after first payout |
| MyFundedPerps | Static 3/5/6%; locks at starting balance on first withdrawal |
| Upscale | Static 6–10% of start; Turbo 6% trailing from highest balance |
| Hyperscaled | 5% end-of-day trailing (8% when scaled) |
| Vanta Trading | 5% static below starting balance; payouts don't move it |
Equity vs balance
Balance counts closed trades only. Equity adds unrealized PnL. Propr: both limits track equity and 'a momentary touch triggers permanent breach'. Carrot: drawdown limits are calculated on equity, not balance. Velotrade, a multi-asset firm, is an exception: its max drawdown ignores floating PnL entirely. If your firm uses equity, a wick against an open position counts even if the trade later closes green.
Frequently asked questions
Which is better, static or trailing drawdown?
Static is friendlier for traders who let winners run or swing trade. Trailing suits traders who bank profits quickly. Static accounts usually come with a smaller percentage to compensate.
Does trailing drawdown ever stop?
At most crypto firms, yes. It locks once the floor reaches your starting balance. Klein's Instant model is an exception: it keeps trailing indefinitely.
Do fees and funding count toward drawdown?
Yes. They reduce your balance and equity, so they count against both daily and max loss limits.
Sources
- Breakout Help Center
- Propr — Trading rules
- Carrot Funding FAQ
- Crypto Fund Trader FAQ
- Klein Funding FAQ
- MyFundedPerps Docs — Challenges and rules
- Upscale FAQ
Educational content, not financial advice. Perps and prop evaluations are high-risk; firm rules change, so check each firm's current terms.
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