Drawdown explained with examples: static, trailing and daily
Drawdown is the rule that ends the most challenges. Understanding exactly how your firm measures it is more valuable than any trading tip.
Static drawdown
With a static drawdown, the loss limit is fixed from your starting balance. On a $100,000 account with a 10% limit, the account fails if equity drops below $90,000, no matter how much profit you made beforehand.
This is the most forgiving type, because every dollar of profit becomes extra room.
Trailing drawdown
A trailing drawdown follows your highest balance upward. Make $4,000 and a 6% trailing limit moves from $94,000 to $98,000. If you then give that profit back, you're out, even though you're still above where you started.
Some firms stop the trailing once the limit reaches the starting balance. Our program pages show the exact rule for each challenge.
The daily loss limit
The daily limit is usually measured from your balance or equity at the start of the trading day, often midnight on the firm's server, not midnight in Nairobi. Open trades count, so a floating loss can break the limit before you've closed anything.
How to stay inside the limits
Risk a small, fixed amount per trade (0.5–1% is common), stop for the day after a set loss, and never let one trade threaten the daily limit. Read the common mistakes too.
Questions people ask
Which type of drawdown is best?
Static gives you the most room. Trailing is stricter, especially early on, when you have little profit to absorb a loss.
Does the daily limit reset at midnight Kenyan time?
Usually not. Most firms reset at midnight server time, so check this before you trade.