What is static drawdown?
A static drawdown is a loss limit calculated once against the account's starting balance, and never moved. Unlike trailing drawdown, it does not follow gains upward.
It is the clearest model in the industry, and by far the most comfortable to manage.
How it works
The calculation is set at purchase and never changes. A $50,000 account with a 10 % static drawdown keeps a floor at $45,000 for the account’s entire life, whatever gains accumulate.
That fixity changes how you trade. Your margin for error does not shrink as you win: it grows. Having taken the account to $55,000, you have $10,000 of room before the floor, against $5,000 at the start. A trailing drawdown would produce exactly the opposite effect.
Why it is rarer
The static model exposes the firm more. A trader who accumulates gains then gives them all back costs it more than a trader eliminated early by a trailing floor. That is why static is more common on the forex segment than on futures, where trailing dominates heavily.
When a firm offers both, the static variant is almost always priced higher, or paired with a higher profit target. That price gap is usually justified: it buys a genuinely less severe constraint.
The point to check
A static drawdown can still be calculated on equity rather than balance. In that case, an open position sitting on an unrealised loss moves you toward the floor even without closing. Check that precise point in the terms and conditions: it is the one nuance that can make a static drawdown less comfortable than it looks.
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Related terms
- Daily loss limit A daily loss limit is the maximum loss allowed on a single trading day. Separate from total drawdown, it resets each day and breaching it means, depending on the firm, the day is suspended or the account is closed.
- Drawdown Drawdown is the maximum loss allowed on a prop firm account before it is closed. It is expressed as a percentage or a fixed amount, and calculated under three models — static, end-of-day trailing or intraday trailing — with very different consequences.
- Trailing drawdown A trailing drawdown is a loss limit that follows the account's gains upward: every new high raises the floor the account must not fall below. It exists in an end-of-day form and a far stricter intraday form.