Prop Firm Drawdown Explained: Static vs Trailing vs EOD Drawdown
2026-07-24 | Category: Guides
Mastering drawdown mechanics in prop trading. Learn how trailing drawdowns, static thresholds, and EOD rules impact your challenge pass rate.
Understanding how proprietary trading firms calculate drawdown limits is the single most important factor for passing evaluation challenges and preserving funded accounts.
### 1. Static Drawdown (Fixed Threshold)
A **static drawdown** threshold remains fixed at a set dollar amount below your starting capital (e.g., $45,000 limit on a $50,000 account). Profits gained during trading expand your safety buffer without raising the liquidation floor.
### 2. Trailing Drawdown (Real-Time Peak Equity)
A **trailing drawdown** moves up dynamically as your open trade equity increases. If your trade surges +$2,000 into profit before retracing back to entry, a trailing drawdown calculates peak equity, pulling the breach threshold higher.
### 3. End-of-Day (EOD) Drawdown
An **EOD drawdown** calculates account balance at the daily market close (e.g., 5:00 PM EST). Intraday unrealized price fluctuations do not lock in higher drawdown floors, giving swing traders room to breathe.