Drawdown explained: static, trailing and daily limits
Drawdown is the rule that ends most challenges. Knowing exactly how your firm measures it is worth more than any trading tip.
Static drawdown
With a static drawdown, the floor is fixed from your starting balance. On a $100,000 account with a 10% limit, the account fails if equity drops below $90,000, however much profit you make first.
It's the most forgiving type: every pound of profit becomes extra breathing room.
Trailing drawdown
A trailing drawdown follows your highest balance upwards. Make $4,000 and a 6% trailing floor moves from $94,000 to $98,000. Give that profit back and you're out, even though you're still above the starting balance.
Some firms stop trailing once the floor reaches the starting balance. Check our programme pages for the exact rule.
Daily loss limit
The daily limit is usually measured from the balance or equity at the start of the trading day (often midnight server time, not UK time). Open trades count, so a floating loss can breach it before you close anything.
How to stay inside
Risk a fixed, small amount per trade (0.5–1% is common), stop for the day after a set loss, and never let one position threaten the daily limit. Our guide to passing goes further.
Frequently asked questions
Which drawdown type is best?
Static gives you the most room. Trailing is stricter, especially early in the challenge when there's little profit to absorb a loss.
Does the daily limit use UK time?
Usually not. Most firms reset at midnight on their server's time zone, so look this up before you trade.