Drawdown types explained: intraday, end-of-day and static
The drawdown model decides where your “you are out” line sits, and whether it moves while you trade. Two firms with the same dollar drawdown can be very different to trade.
Static (balance-based) drawdown
The loss limit is a fixed distance from your starting balance and never moves up. On a $100,000 account with a 10% static limit, the floor is $90,000 for as long as the account lives, even if you grow it to $120,000.
This is the easiest model to plan around because the floor is a fixed number.
Trailing end-of-day (EOD) drawdown
The floor trails your account balance, but it is only recalculated at the end of the trading day, based on your closing balance. Intraday swings do not move it. If you start the day at $50,000 with a $2,000 drawdown (floor $48,000) and close the day at $51,000, tomorrow’s floor becomes $49,000.
Traders generally prefer EOD because a winning trade that gives back profit during the day does not ratchet the floor up.
Trailing intraday (open P&L) drawdown
The floor follows your highest equity in real time, including unrealized profit. If a position is $1,500 in profit at its peak, the floor rises by $1,500 immediately, even if you then close the trade for $200 profit. The floor never moves down.
This is the hardest model to pass: you effectively give back your drawdown allowance whenever a profitable trade retraces. Scalpers and traders who hold through pullbacks suffer most.
Worked example
Account $50,000, drawdown $2,000. You are up $1,200 intraday and then take a normal pullback of $900 and close flat. Static: floor still $48,000 and you have not lost anything. EOD trailing: floor stays $48,000 until the day closes. Intraday trailing: the floor rose to $49,200 when you peaked, so you now have only $800 of room instead of $2,000 left.
Which should you choose?
If you can choose, the order for most traders is static, then EOD, then intraday. Some firms let you choose a model per account type; the comparison tables on this site show the model of each firm’s main program and note when programs differ.
FAQ
Is a trailing drawdown always bad?
No. An end-of-day trailing drawdown is usually fine. The intraday version is the one that punishes pullbacks.
Does the drawdown stop trailing at some point?
Many firms lock the floor once it reaches the starting balance (or a fixed level). Check each firm’s rules: this is called a drawdown lock or stop-trail.