Trailing Drawdown Explained

Understand the idea

A trailing drawdown threshold moves with a defined high-water mark. The mark may use intraday equity, end-of-day balance, or another firm-specific measure. Whether it later stops trailing depends on the exact plan.

Related: how each futures prop firm handles trailing drawdown

A decision to think through

In a hypothetical account, a $2,000 trailing allowance beneath a $50,000 high-water mark gives a $48,000 floor. If the applicable high rises to $51,000, the floor becomes $49,000 under this example.

Try it through free practice

Write down what moves the floor, what counts toward the high, and what happens after withdrawals. Use the official terms for the plan rather than a brand-wide assumption.

• Explain the evidence available before the outcome.
• Read the feedback and identify one change to your process.
• Revisit the decision later and check what you remember.

Your next free learning challenge

Play the free risk-sizing game. Make five decisions, read the explanation after each answer, and try to state the condition in your own words. First-time correct decisions earn skill XP; later reviews check what you remember. You can then apply the idea in a chart round and inspect the replay. All games, levels, written lessons, and feedback are free, with no signup or real money.