Trailing drawdown explained

A trailing drawdown is a maximum-loss floor that moves up as your account makes new highs, so the distance between your equity and the floor never grows beyond the drawdown amount. Intraday trailing moves the floor with open (unrealised) profit; end-of-day trailing moves it only from the closing balance; a static drawdown never moves.

Updated · Elave editorial

The three drawdown types

  • Static: the floor is fixed at start balance minus the max loss. It never moves.
  • End-of-day (EOD) trailing: at each daily close, if the balance made a new high, the floor rises to that high minus the max loss.
  • Intraday trailing: the floor follows the highest equity reached during the session, including open profit you later give back.

Worked example — $50,000 account, $2,000 trailing max loss

The floor starts at $48,000. You close day one at $51,000: with EOD trailing the floor rises to $49,000.

With intraday trailing, if a trade reached +$1,500 open profit and closed flat, the floor already moved to $49,500 even though your balance did not change. That is why intraday trailing accounts punish wide targets and letting winners round-trip.

When does the trailing stop?

Many futures firms lock the floor once it reaches the starting balance (or start plus a small buffer), or after the first payout. The exact trigger differs by firm, program and sometimes trading platform — check the firm page or the official rules.

FAQ

Is end-of-day trailing drawdown better than intraday trailing?
End-of-day trailing is more forgiving because open profit that you give back during the session does not raise the floor. Intraday trailing raises the floor at the equity peak.
Does a trailing drawdown ever stop trailing?
At many firms it locks at the starting balance or after the first payout, but the trigger varies by firm and program; confirm it in the official rules.

Sources

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