Prop firms

What is Trailing drawdown?

By the verify.trading team · Last reviewed · How we write

A trailing drawdown is a loss limit that moves up as your account reaches new highs, so the room to lose shrinks as you profit.

Key points

  • Follows the highest point reached.
  • Can trail floating equity.
  • Read whether and when it stops trailing.

Trailing drawdown explained

Where a static limit stays at a fixed level, a trailing limit follows your peak. Some versions trail equity in real time, including open profits, which can catch traders who let a winner reverse. Firms also differ on whether and when the trail stops.

General education, not investment advice. Regulatory limits and prop firm rules change; check the official source. verify.trading provides records and analysis, not investment advice; trading involves significant risk of loss. Absence of a regulatory action is not an endorsement, and absence from a regulator's list is not proof of authorisation.

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