What is the difference between trailing and static drawdown?

Drawdown rules define the loss floor at which an evaluation account is closed. A static maximum loss anchors that floor to the account's opening balance. It is set once and never moves: gains raise the distance between the current balance and the floor, and losses reduce it. A trailing maximum loss anchors the floor to the account's peak instead. As the account rises, the floor rises with it, keeping the permitted loss at a constant distance below the highest point reached. The consequence is that a sequence of gains followed by a partial give-back can breach a trailing limit while the account is still above its starting balance — an outcome that is structurally impossible under a static rule of the same size.

The trail can follow one of two things, and the difference matters more than how wide the allowance is. A balance-based trail updates only when a position is closed, so unrealised profit on an open trade does not lift the floor. An equity-based trail updates on unrealised profit too, meaning the floor rises the moment a position moves favourably, and it does not fall back when that profit is surrendered. Under an equity trail, a position that runs up and then returns to entry has permanently raised the loss floor without producing any closed gain. The same nominal allowance therefore behaves very differently depending on which measure it tracks, and this is where two offers that look identical in their rule tables diverge in practice.

Many trailing rules stop moving at a defined point — commonly once the floor has climbed to the level of the starting balance, at which stage it locks and behaves like a static rule from then on. Others trail for the full life of the evaluation, or trail during the evaluation and convert to static in the funded-simulation stage. A frequent misreading is to treat the loss limit as a distance from the current balance; it is a distance from a reference point, and only the choice of reference point determines whether progress is protected. A second misreading is to compare drawdown percentages across offers without checking the reference basis, the update trigger and the lock condition, which together determine what the number actually permits.