Drawdown Floor

Drawdown & Loss Limits

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According to Vigil's prop trading glossary, Drawdown Floor is the minimum account balance or equity level before a prop firm terminates the account. If your balance or equity touches this level, the account is immediately closed and the evaluation or funded status is lost. In prop trading, understanding drawdown floor is critical because it directly affects your drawdown limits, position sizing, and whether you pass or fail an evaluation.

This term is part of the full prop firm glossary.

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How does drawdown floor work?

The drawdown floor is the hard boundary that defines your maximum allowable loss. It is calculated differently depending on the drawdown type: static floors are fixed at account opening, while trailing floors move upward as your account grows.

For static drawdown, the floor is simple: starting balance minus max drawdown percentage. A $100K account with 10% static drawdown has a permanent floor at $90,000. For trailing drawdown, the floor starts at the same place but rises as you profit. If you grow to $105,000, an EOD trailing floor moves to $95,000 (on a $10K drawdown).

The floor is typically checked against either balance (closed trades only) or equity (including open trade P&L). Equity-based floors are stricter because a large unrealized loss can breach the floor even if you haven't closed the losing trade. Understanding exactly how your firm calculates the floor is essential for survival.

What does drawdown floor look like in practice?

Apex $50K with $2,500 trailing intraday drawdown: floor starts at $47,500. You make $3,000 intraday and your equity peaks at $53,000. Floor immediately moves to $50,500. You then give back $2,800 and equity drops to $50,200 -- below the $50,500 floor. Account terminated. The floor moved $3,000 up from $47,500 to $50,500 because of the intraday high.

Why does drawdown floor matter for prop firm traders?

Drawdown Floor is the rule that ends most evaluations. Every position sizing decision flows from how your firm calculates it. Get it wrong and the account is gone before your strategy has time to work.

Practical example across firms: FTMO: 2-step, static drawdown, 5% daily loss, from €155. TopStep: 1-step, trailing drawdown, 2% daily loss, from $49.

Common mistake: The most common mistake with drawdown floor: assuming it works the same across firms. Static vs trailing drawdown can be the difference between surviving a losing streak and blowing an account that is still net profitable. Calculate your room in dollar terms for your specific firm before trade one.

How do different firms handle drawdown floor?

Understanding drawdown floor is essential when choosing and trading with a prop firm. Compare how different firms handle this:

What terms are related to drawdown floor?

Trailing Drawdown

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.

Static Drawdown

A fixed maximum loss threshold set at account opening that never moves, regardless of how much profit you accumulate. Your drawdown floor stays at the same level for the lifetime of the account.

Equity-Based Drawdown

A drawdown calculation method that includes unrealized (open) trade profits and losses in the account value. Your equity fluctuates with every tick while positions are open, making this stricter than balance-based drawdown.

Balance-Based Drawdown

A drawdown calculation method that only considers closed trade results, ignoring unrealized profits and losses from open positions. Your balance only changes when trades are closed.

Margin Call

A notification or automatic action triggered when your account equity falls below the required margin level. In prop firm trading, margin calls are effectively replaced by drawdown limits -- the firm terminates the account rather than requesting additional funds.

See drawdown floor in action
Where can I learn more?

How to Pass FTMO $200,000

Step-by-step guide

How to Pass TopStep $150,000

Step-by-step guide

How to Pass Apex Trader Funding $300,000

Step-by-step guide

FTMO Trust Score

Independent trust audit

TopStep Trust Score

Independent trust audit

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