An in-depth guide
Static vs trailing drawdown: one ledger, different loss limits
A hypothetical ledger separates balance from equity and daily cutoffs from intraday measurement. Calculate a static floor and three trailing variants without substituting for actual programme terms.
Static or trailing: what moves, and what is tested?
With a static loss limit, the breach floor stays in the same place. A trailing floor rises when the account sets a high under the programme's definition. Understanding the difference also requires identifying that high: closed balance or equity including open profit, measured during the day or only at the daily cutoff.
There are two separate decisions: when the floor is updated and when the account is tested against it. A floor updated at the end of the day can still be breached intraday. This article uses a simulated ledger and rules defined for the explanation. It is not a calculator for FTMO, FundedNext or another firm's terms, and it does not establish reward eligibility.
Ledger assumptions: balance, equity and costs
Start a simulated account at USD 50,000 and define a fixed loss distance of USD 2,000. In this example, balance is the amount after closed trades, while equity is balance plus open P&L. All costs already incurred are included in the figures and must not be subtracted again.
For all four variants, assume continuous equity monitoring and a breach at or below the floor. Assume no floor lock, withdrawals or special resets. These are explicit teaching assumptions, not uniform industry rules. An actual programme also requires checking the precise boundary condition: touching the floor, crossing it or another definition.
The same trading ledger, day by day
Scroll the table horizontally to read every column.
| Point in time | Balance in USD | Equity in USD |
|---|---|---|
| Start of day 1 | 50,000 | 50,000 |
| Day 1: peak open profit | 50,000 | 52,400 |
| End of day 1: trade closed | 50,800 | 50,800 |
| Day 2: after another closed trade | 51,400 | 51,400 |
| Day 2: loss on an open trade | 51,400 | 50,100 |
| End of day 2: trade closed, in surviving variants | 50,500 | 50,500 |
On the first day, open profit reached USD 2,400 but closed at USD 800. The second day added USD 600 from a closed trade, followed by an open loss of USD 1,300. That final trade eventually closes at a USD 900 loss only in variants that have not already breached. The intraday balance high is 51,400, the end-of-day balance high is 50,800, and the equity high is 52,400. Those are three different measurement bases.
Four floors at the same moment
Examine the open loss on the second day, when equity is USD 50,100. For each trailing variant, use its relevant high, with the initial balance as a minimum calculation base, and subtract USD 2,000.
Scroll the table horizontally to read every column.
| Hypothetical rule | Floor in USD | Equity headroom |
|---|---|---|
| Static from initial balance | 48,000 | USD 2,100 above |
| Trailing from highest end-of-day balance | 48,800 | USD 1,300 above |
| Trailing from highest intraday balance | 49,400 | USD 700 above |
| Trailing from highest intraday equity | 50,400 | USD 300 below: breach |
The final variant breaches even though equity remains USD 100 above the initial amount. Its floor rose with open profit on the first day. The end-of-day-2 row does not describe recovery in an already-breached account; it applies only to variants still active.
Trailing balance does not necessarily mean trailing equity
On the first day, balance stays at USD 50,000 before the close despite the open profit. A rule following only closed trades therefore does not raise its base to 52,400 at that point. On the second day, another closed profit lifts the balance high to 51,400 even if some profit is lost before the day ends.
The term intraday alone therefore does not explain the calculation: a floor can update after each close or follow every new equity high. End of day does not by itself establish balance versus equity either. Identify both the measured variable and the measurement time rather than filling in missing details from the programme name.
The daily cutoff updates the floor; a breach can happen earlier
In the example's end-of-day variant, the second day's floor is USD 48,800. If equity fell to 48,700 during the day, the account would breach even if its closed balance remained higher. Under the stated assumptions, checking for a breach does not wait until the daily cutoff.
A daily loss limit is another test, with its own base and reset time. An account can satisfy the overall limit and breach the daily one. In a separate scenario with an overall floor of 48,800 and a daily floor of 49,600, equity of 49,500 breaches only the daily limit. Also check unbooked commission and financing, and the provider's time zone rather than assuming your device's midnight is the reset.
Percentages, locks and withdrawals can change the formula
The USD 2,000 distance is 4% of the example's initial amount. It is not the same as 4% of a changing high. After a high of 52,400, subtracting a fixed amount gives a floor of 50,400; subtracting 4% of the high gives 50,304. Establish what the percentage is applied to.
Stopping the trail at a particular level is not an inherent feature of every rule. Without an explicit clause, do not assume the floor locks at the initial balance. Withdrawals and stage changes can also receive different treatment across programmes. Evaluating a future payment requires reading withdrawal and floor terms together; having a profit does not establish that it can be withdrawn without affecting the account.
Connect the explanation to an actual programme
FTMO's CFD documentation distinguishes a static floor for 2-Step from an end-of-day balance trail for 1-Step, with equity monitoring. FundedNext's Stellar 2-Step example keeps a USD 90,000 floor for an initial USD 100,000 account even after profit. These examples must not be applied to every product from those companies.
Our ledger starts at USD 50,000 with a USD 2,000 distance, so it does not illustrate those monetary terms. The FTMO programme comparison develops the differences between programmes. Before using any figure, match the programme name, stage and terms version to the particular account.
A useful worksheet before a trading day
Record balance, equity, the high used to set the floor, the update time and the currently active floor. Then calculate equity headroom to both the overall and daily floors. If both limits apply, the smaller distance identifies the closer boundary, but it is not an amount to use in full: costs and rapid price changes can consume it.
Check in your ledger how an open profit returning to zero, a commission charge or a position held through the cutoff affects each rule. The prop evaluation guide covers the structure of an evaluation, while the position-size guide explains trade sizing. A clear drawdown calculation describes the boundaries; it does not guarantee passing an evaluation or receiving a payment.
