Learn · Prop firm challenges · 7 min read
Prop firm drawdown rules: daily, max and trailing
Drawdown means how far your account has fallen from a previous level. Prop firms set two limits on it. Breaking either one usually ends your account (a few programs just pause your trading for the rest of the day instead).
Daily loss limit
The most you can lose in one trading day. Most firms measure it from your balance at the start of the day (some use whichever is higher: your balance or your equity). Open trades usually count too, even if you haven't closed them.
Example: $100,000 account with a 5% daily limit. You start the day at $102,000. 5% of $100,000 is $5,000, so your floor for today is $102,000 − $5,000 = $97,000. If your equity touches $97,000, even for a second, the account fails.
Max loss limit: static
The most you can lose in total. A static max loss never moves. With a 10% static limit on $100,000, the floor is $90,000 forever, even if you grow the account to $120,000.
Max loss limit: trailing
A trailing (or dynamic) max loss moves up as your account makes new highs. Some firms trail your highest end-of-day balance, others your highest closed balance. The floor follows you up but never comes back down.
Trailing limits are trickier: giving back profits can fail the account even when you're still above where you started.
What the firms we track use
| Firm | Drawdown rules |
|---|---|
| FTMO | 2-Step: 5% daily / 10% max. 1-Step and Instant: 3% daily / 10% trailing |
| The5%ers | High Stakes (2-Step): 5% daily / 10% max. Hyper Growth (1-Step): 3% daily / 6% max |
| E8 Markets | E8 One: you pick 4–14% max (dynamic), daily limit 3–9.2%. E8 Pro: 8% max (static), 2.5% daily |
Rules checked on each firm's own site (Oct 22, 2026, Oct 24, 2026). Rules change often, so check before you buy.
How to stay safe
- Risk well under the daily limit per trade. With a 5% daily limit, 0.5% to 1% per trade leaves room for a bad day.
- Set your own daily stop below the firm's, for example stop at −3% when the limit is −5%.
- Remember open trades count. A trade that's down a lot can fail you before you close it.
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- Daily limit: usually measured from your start-of-day balance.
- Static max loss never moves; trailing follows your highs.
- Set your own daily stop below the firm's limit.
Compare the firms' drawdown rules side by side →
For learning only, not financial advice. Trading on margin is high risk.