Does trailing drawdown reset, and does it move after a payout?

A trailing drawdown level moves in one direction only. It follows the account upward as the reference figure it tracks makes new highs, and it stays where it is when the account falls. A losing day does not pull the level back down; the room between the current balance and the level simply shrinks. This is what people mean when they call it a ratchet. The consequence is that a run of gains followed by a return to the starting balance can leave an account close to breach even though it has not lost anything relative to where it began.

Many programmes stop the trailing once the level has climbed to the starting balance, or to that balance plus the original distance, depending on how the rule is written. From that point the threshold is fixed and behaves like a static floor. Where no such stopping point exists, the level keeps following every new high for the life of the account, and the effective loss allowance never returns to its opening size. Whether the rule locks, and at what reference point, is the single largest source of variation between otherwise similar offers.

A withdrawal reduces the balance but does not reduce a level that has already ratcheted up. The distance between the two narrows by the amount taken out, so the account has less room afterwards than before. Some programmes offset this by lowering the threshold in step with the withdrawal, or by fixing the level at the moment of the first payout; others do not, and the tightening is permanent.

The measurement basis changes each of these answers. A level tracked against closing balance updates once per session and only registers gains that have been realised by the close, so an open position that runs up and then gives the gain back leaves the threshold untouched. A level tracked against equity continuously registers the peak of the unrealised gain as it happens, raises the threshold to match, and does not lower it when the position retraces — the account can then breach on a trade that closes flat. The same account, the same trades, and two different outcomes, decided by that one line in the rules.