Prop trading module · lesson 3 of 5
Maximum drawdown
Pass a challenge without a rule break: know your room to every limit before entry.
Step 1 · Static
A static floor stays put for the whole challenge.
A 10% drawdown on $100 000: the account must never drop below $90 000, however high the balance climbs.
The account path is an example. Check your program's rules for the limit and what it's measured from.
Static floorscheme Step 2 · Trailing
A trailing floor follows the peak up.
The account peaked at $108 000, so the floor sits one limit below: $98 000. It never moves back down.
If the floor trails equity, the peak catches floating profit on an open trade. On a static floor the same path would survive, with the floor at $90 000.
Floor trailing the equity peakscheme Step 3 · Work it out
Where does a balance-trailing floor sit?
Example: the floor follows the balance peak across closed trades. Day one is up, day two is down.
- Starting balance$100 000
- Drawdown10% trailing
- Day one$4 000
- Day two−$2 000
Practice on the chart
This one is a calculation task: pick an answer from the options and the lesson checks it by calculation.
Create an accountThis step unlocks after sign-up. Your progress is saved.Step 4 · EOD
An EOD trailing floor only looks at the day's close.
A spike to $108 000 inside a day doesn't move the floor. The best day close counts: $105 000.
Floor by day closesscheme Step 5 · Work it out
Where does the EOD trailing floor sit the next day?
Example: the balance hit a peak during the day, then came back. The floor is set by the close.
- Starting balance$100 000
- Drawdown10% EOD trailing
- First trade of the day$3 000
- Second trade of the day−$2 500
Practice on the chart
This one is a calculation task: pick an answer from the options and the lesson checks it by calculation.
Create an accountThis step unlocks after sign-up. Your progress is saved.Step 6 · Lock
The floor can lock at the starting balance.
Once the peak reaches $110 000, the floor stops at $100 000 and rises no further.
Not every program locks the floor, and some lock it at another level. Check your rules.
Floor lockscheme Step 7 · Rule
Know your drawdown type and your floor before the first trade.
to your checklist · manualI know my drawdown type and floor
The item goes into your pre-entry checklist. The platform doesn't check it, so you do.
Lessons in this module
Take the lesson with practice
In the app, the lesson checks you on the chart, adds the rule to your Pact, and saves your progress.
Free. The Academy is part of the free plan.