Glossary · Prop Firms
Drawdown Lock
A drawdown lock is the point at which a trailing (or end-of-day) drawdown floor stops rising and becomes permanently fixed, usually once account equity or balance grows past the starting level by a set margin. It applies only to funded/live accounts, not evaluations, and once triggered the floor never moves up again regardless of further profit.
Why it matters
Once locked, the gap between current equity and the account-closing level is fixed for good, so a trader's remaining cushion depends entirely on where they were sitting when the lock triggered. Some firms enforce the breach level in real time even though the dashboard figure only refreshes at end of day, which means a mid-session dip can close the account before the trader ever sees an updated number.
Live data
Example
A funded account carries a trailing drawdown buffer. As equity climbs, the breach level trails a fixed distance below the peak. Once equity reaches a set threshold above the starting balance, the breach level locks permanently at the starting balance and stops trailing higher, even if equity later climbs much further.
Common misconception
Traders assume a drawdown lock only ever works in their favor by freezing a higher floor, but the details matter. Some firms lock based on equity, including floating (open trade) profit and loss, not closed balance, so the lock can trigger from an unrealized gain the trader never banked, and can just as easily be threatened by a floating loss even while balance looks healthy. Withdrawing profit before or after a lock doesn't move the breach level, but it does shrink the live buffer between current equity and that floor, leaving less room for error on the very next trade. Evaluation accounts typically don't have a lock at all, since the mechanism is designed for funded stages.
Related terms
See also
The Funded Account glossary page is the natural next read, since drawdown locking almost always applies once an account reaches funded status rather than during the evaluation phase.
Sources
Risk disclaimer: Trading carries a substantial risk of loss and is not suitable for everyone. Prop-firm evaluations charge fees and most traders do not pass. Nothing here is financial advice; figures can change, so verify current terms with the firm before purchasing.
Next step
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