What is a Trailing Drawdown?

A trailing drawdown is a drawdown that is pegged to your positive account performance. That means that if you increase your profit by $1.00, then your trailing drawdown will also rise by $1.00. All rules, including trailing, use closed and open equity intraday.

For example, in a $50,000.00 account your starting trailing drawdown is $48,000.00.

On your first trade as you make $100.00 in profit it will bring your account balance to $50,100.00. This correspondingly raises your trailing drawdown to $48,100.00.

This continues until your trailing drawdown reaches the starting balance of your account, or in this case $50,000.00, at which point the drawdown will no longer trail above $50,000.00.

Traders who pass the Trader Career Path® or Gauntlet Mini™ challenges and go to a Live account will have to adhere to the trailing drawdown rule as described above. Traders who go to a LiveSim account will have to follow the EOD Drawdown rule, as described here.