A trailing drawdown is a risk-limit mechanism designed to calculate the maximum allowable loss from the highest value an account has reached, rather than from its starting balance. As the account makes new highs, the loss limit moves up with it; in most implementations it never moves back down.

Example: a $100,000 account with a 6% trailing drawdown begins with a $94,000 limit. If equity reaches $104,000, the limit trails to $98,000. Whether the limit tracks closed balance or floating equity, and whether it locks at the starting balance once breakeven is reached, varies by program — these two details decide most breaches, so always confirm them in the rules document.

To find your exact floor in dollars under a trailing model — and track how it moves as your account peaks — use the drawdown calculator. For a worked example of trailing drawdown during a live evaluation, including the common mistake of assuming profits create permanent buffer, see How to Pass a 2-Step Evaluation.