Drawdown rules are the most misunderstood part of any prop firm challenge and funded account — not because they're unfair, but because traders misunderstand how they're calculated until it's too late. This guide explains every type of drawdown rule used across major prop firms.
The two types of drawdown limit
Daily loss limit — the maximum you can lose in a single trading day, measured from your balance at the start of that day (or your initial balance, depending on the firm). Most firms set this at 3–5%.
Maximum total drawdown — the total loss allowed over the lifetime of the account. Once hit, the challenge or funded account is terminated. Most firms set this at 6–10%.
Static vs trailing drawdown
This distinction matters enormously and catches many traders by surprise.
| Type | Based on | Firms | Key difference |
|---|---|---|---|
| Static | Initial balance | FTMO, FundedNext, Funding Pips | Limit never changes — always calculated from starting balance |
| Trailing | Peak equity | Apex Trader, TopStep | Limit moves up as you profit — can be tighter than it looks |
Starting balance: $50,000 · Trailing drawdown: $2,000
You profit to $52,000 → your floor moves to $50,000
You then lose back to $50,000 → account terminated
Even though you're at breakeven, the trailing drawdown was hit.
How FTMO daily loss limit is calculated
FTMO uses a static daily loss limit of 5% of your initial balance. On a $10,000 account that's always $500, regardless of whether your account has grown.
The limit includes open floating losses. If your open trades show a $500 unrealised loss at any moment during the day, you've hit the limit — even if no trades have closed. The day resets at midnight CET.
Firm drawdown rules compared
| Firm | Daily limit | Max drawdown | DD type |
|---|---|---|---|
| FTMO | 5% | 10% | Static |
| FundedNext | 5% | 10% | Static |
| The5ers | 4% | 8% | Static |
| Funding Pips | 4% | 8% | Static |
| Blue Guardian | 3% | 6% | Static |
| Goat Funded | 4% | 6% | Static |
| Blueberry Funded | None | 5% | Static total only |
| TopStep | 4% | Trailing | Trailing from peak |
| Apex Trader | None | Trailing | Trailing from peak equity |
How to track your drawdown daily
Use the PropRisk Drawdown Tracker tab. Enter your starting balance, current balance, and today's loss. The tracker shows exactly how much daily and total headroom you have left, colour-coded by risk level.
Free prop firm drawdown calculator — daily & total limits
Live daily and total drawdown meters for FTMO, FundedNext, Funding Pips and 20+ prop firms. Colour-coded alerts tell you exactly how much headroom you have left before the limit.
Open the free prop firm drawdown calculator →