Understanding the Trailing Drawdown Visualizer
Proprietary trading involves strict risk management parameters. The trailing drawdown visualizer is designed to help funded traders calculate their metrics with precision before executing a trade in the live market, safeguarding their accounts from accidental breaches.
Frequently Asked Questions
What is trailing drawdown in prop trading?
Trailing drawdown (or high-water mark drawdown) is a dynamic limit that moves UP with your account's peak balance but never moves back down. For example, with a 6% trailing drawdown on a $100K account, your limit starts at $94K. If you profit to $103K, your limit trails up to $97K. It locks in and never drops.
How is trailing drawdown different from static drawdown?
Static drawdown is a fixed limit based on your starting balance — it never moves. Trailing drawdown follows your highest equity, making it progressively harder to maintain as your profits grow. Many traders accidentally breach trailing drawdown after a winning streak.
How do I avoid breaching a trailing drawdown?
Be cautious after a winning streak — your drawdown limit has moved up closer to your current balance. Many traders breach after giving back profits. Use this visualizer to simulate your recent trades and see exactly how much room you have left.