A drawdown limit that remains fixed at a set level below the initial account balance, regardless of how much profit the trader earns. Unlike trailing drawdown, the drawdown floor never moves upward.
Why It Matters
- 1Static drawdown is significantly more forgiving than trailing drawdown because your safety margin grows as you profit.
- 2With a static drawdown of $90,000 on a $100,000 account, earning $10,000 in profit gives you a $20,000 buffer before failure.
- 3With trailing drawdown, that buffer would still be $10,000 because the floor moves up with your peak equity.
- 4Firms offering static drawdown are generally more trader-friendly, though they may compensate with stricter rules elsewhere.
Example
- 1You have a $100,000 account with a 10% static drawdown — your floor is permanently set at $90,000. You earn $15,000, bringing your account to $115,000. Your drawdown floor stays at $90,000, giving you a $25,000 cushion.
- 2With trailing drawdown, the floor would have moved to $105,000, leaving only a $10,000 cushion.
Common Mistakes
- ✖Assuming all prop firms use static drawdown — trailing drawdown is actually more common
- ✖Becoming reckless with a large buffer after significant profits
- ✖Not verifying whether the drawdown type is truly static (fixed from initial balance) or whether the firm uses a trailing