DEFINITION
Drawdown
The peak-to-trough decline in equity, expressed as a percentage or dollar amount. Used to measure risk exposure and as the main failure criterion in prop firm evaluations.
In depth
There are 3 main drawdown types: daily (resets each session), max (lifetime account loss), and trailing (follows equity highs). Each prop firm uses some combination.
Related terms
Daily Drawdown
The maximum percentage loss allowed in a single trading day. Calculated from the balance (or equity) at the start of the day. Breaching this limit at any point during the session fails the account immediately.
Max Loss
The total percentage loss allowed over the lifetime of a prop firm account. Typically 6–10%. Breaching the max loss at any point fails the account permanently.
Trailing Drawdown
A drawdown calculation method where the maximum loss limit trails the highest equity point reached. Used by Apex — locks in profits but creates an invisible rising floor.
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