{"term":{"slug":"trailing-drawdown","term":"Trailing Drawdown","definition":"A maximum loss threshold that moves upward as your account reaches new equity highs. Unlike static drawdown, the floor rises with profits, meaning gains raise the minimum balance you must maintain.","extendedExplanation":"Trailing drawdown is the most misunderstood rule in prop trading. When your account hits a new high-water mark, the drawdown floor moves up by the same amount. This means your profit cushion never actually grows until the trail \"locks in\" at the original account balance.\n\nThere are two variants: EOD trailing (floor updates at end of day based on closing balance) and intraday trailing (floor updates tick-by-tick in real time). EOD trailing is more forgiving because intraday spikes in profit do not permanently raise the floor. Intraday trailing is the strictest type.\n\nUnderstanding which type your firm uses is critical. Many traders blow accounts because they assume static drawdown rules when the firm actually uses trailing. Always check whether drawdown is calculated from balance or equity, and whether it trails intraday or EOD.","exampleWithNumbers":"On a TopStep $50K account with $1,500 trailing EOD drawdown: you start with a floor at $48,500. You profit $2,000 and close the day at $52,000. The floor moves up to $50,500. If you then lose $1,600, your balance drops to $50,400 -- below the $50,500 floor. Account terminated, even though you were still above your starting balance.","category":"drawdown","relatedTerms":["static-drawdown","eod-drawdown","intraday-drawdown","drawdown-floor","equity-based-drawdown"]},"_links":{"self":"https://runvigil.app/api/glossary/trailing-drawdown","page":"https://runvigil.app/learn/trailing-drawdown","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}