Static vs trailing drawdown

Static drawdown stays at a fixed floor based on the starting balance. If a $25,000 account has a 6% static drawdown, its floor is $23,500 even if the account grows.

Trailing drawdown moves upward as the account reaches new highs, depending on the firm’s exact calculation. A profitable trade can therefore make the future breach level tighter.

Always check whether drawdown is measured from balance or equity, whether floating profit counts, when the high-water mark updates, and whether a payout resets the limit.