Glossary · Prop Firms
Static Drawdown
Static drawdown is a maximum loss limit calculated once from an account's initial balance and held fixed for the account's entire life. It sets the hard breach floor at account opening, and that floor never moves, whether the balance falls, rises, or sits untouched, unlike trailing drawdown, which shifts with equity gains.
Why it matters
A fixed breach floor lets a trader calculate, on day one, the exact dollar level that ends the account, and that number never changes as profit accumulates. This matters most after a strong run: with trailing drawdown, unrealized gains can pull the breach level up and shrink your cushion, while static drawdown leaves the original floor untouched, so banked profit adds real breathing room rather than tightening the rule against you.
Live data
Example
On an initial balance with a fixed static max drawdown percentage, the breach level is set once at account opening, so equity or balance can never legally fall below that fixed dollar floor for the life of the account. If the trader grows the balance through profitable trading, the floor stays at its original level, it does not rise with the new balance. That fixed relationship between initial balance and breach level is the defining feature of static drawdown.
Common misconception
Traders often assume every prop firm's drawdown rule trails with equity, so the breach level should move with account growth. In practice, many firms run static drawdown on at least one plan type, commonly two-step challenges, while reserving trailing drawdown for one-step or instant funding plans. Confusing the two leads traders to misjudge how much real cushion they have after a strong run of profits, either overestimating risk under a static rule or underestimating how a trailing floor can creep upward.
Related terms
See also
For a documented static drawdown example, see the FXIFY firm profile, which lays out its static drawdown mechanics across its multi-phase evaluation plans.
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.
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