Trailing drawdown
A trailing drawdown is a loss limit whose floor moves up as the account makes new highs, so the distance you can lose is measured from your peak rather than from your starting balance.
How it works
The firm records a floor at a fixed distance below the account's high-water mark. When the account makes a new high the floor follows it up; when the account loses, the floor stays where it is. Firms differ on which high they track: an intraday model follows the highest equity touched during the session, an end-of-day model follows the highest closing balance. Most firms lock the floor permanently once it reaches the starting balance plus a small margin, commonly $100, after which the account behaves like a static one.
Why it matters on a funded account
On a funded account this is the number that ends the account, not the profit target. A strategy sized against account balance ignores it; a strategy sized against the distance to the floor respects it. That distance is the buffer, and it is what position size has to fit inside on every trade.
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Part of the Puravida Edge prop trading glossary. Firm-specific figures verified September 2026; rules change frequently — confirm on the firm's site.