Prop firms
What is Maximum drawdown?
By the verify.trading team · Last reviewed · How we write
Maximum drawdown is the total loss a prop firm allows an account to reach before it is closed, measured against a fixed or moving reference point.
Key points
- The overall loss cap for the account.
- Static or trailing depending on the firm.
- Breach ends the account.
Maximum drawdown explained
It is the overall limit, as opposed to the daily one. It may be static, measured from the starting balance, or trailing, measured from the account's highest point.
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