Drawdown, clearly explained: static, trailing and daily
Drawdown ends more challenges than any other rule. Knowing precisely how your firm measures it is worth more than any refinement to your strategy.
Static drawdown
A static drawdown sets the loss floor from your opening balance. On a $100,000 account with a 10% limit, the account fails below $90,000, whatever profit came first.
It is the most generous form: every dollar of profit becomes additional headroom.
Trailing drawdown
A trailing drawdown follows your highest balance upward. A $4,000 gain lifts a 6% trailing floor from $94,000 to $98,000. Surrender that gain and the account ends, even above the opening balance.
Some firms halt the trail once the floor reaches the opening balance. Each program page states the exact rule.
The daily limit
The daily limit is usually measured from the balance or equity at the start of the trading day, typically midnight on the firm's server clock rather than Gulf Standard Time. Floating losses count, so an open position can trigger a breach.
Staying within limits
Commit a small, fixed amount per trade (0.5–1% is common), stop for the day after a set loss, and never let one position endanger the daily limit. Our guide to passing goes further.
Questions, answered
Which drawdown type is preferable?
Static allows the most room. Trailing is stricter, particularly early on, when there is little profit to absorb a loss.
Does the day reset at midnight UAE time?
Usually not. Most firms reset at midnight server time; confirm before trading.