📉Drawdown

Drawdown Calculator

Find your drawdown threshold, check how much buffer remains, and see how many losing trades you can absorb before breaching.

Drawdown model

Threshold rises as balance grows — tracks the highest balance reached.

Starting balance ($)

Drawdown limit ($)

Highest balance reached ($)

The peak balance your account has reached — the threshold is calculated from this.

Current balance ($)

Risk on next trade ($)

Buffer health

Healthy

Breached100.0% of limit remainingFull buffer

Breach threshold

$47,500.00

Account value where you breach

Remaining buffer

$2,500.00

100.0% of original limit

Max consecutive losses

At $150 risk per trade

Recommended max risk

$250.00

10% of remaining buffer

Next trade check

Safe — within your remaining buffer

This trade uses 6.0% of your remaining buffer

✓

Trailing drawdown tracks your highest balance reached (the watermark) — the threshold rises as your account grows and never drops back. Static / EOD drawdown is calculated from starting balance only. Always confirm the exact rules with your prop firm.

Understanding prop firm drawdown limits

Drawdown is the reduction in your account balance from its peak to a subsequent trough. For prop firm traders, drawdown limits are the single most important rule to understand — breaching them results in immediate account termination, regardless of how profitable you have been overall.

Static vs trailing drawdown

There are two fundamentally different types of drawdown used by prop firms. Static drawdown (also called balance-based drawdown) is calculated from your initial starting balance and never moves. If you start with a $100,000 account and have a 5% max drawdown, your hard limit is $95,000 — full stop. Winning trades do not change this number.

Trailing drawdown works differently: the limit follows your account equity as it rises. If your $100,000 account grows to $105,000, your drawdown floor rises to $100,000. This is significantly more dangerous. A strong start to your challenge can permanently reduce your room to manoeuvre, and many experienced traders have been caught out by trailing drawdown during a recovery period after a winning streak.

Daily loss limits vs overall drawdown

Most prop firms impose two separate drawdown rules: a maximum daily loss and a maximum overall drawdown. The daily loss limit resets every day (usually at midnight server time or at market open) and is typically set at 1–5% of the account. Hitting your daily loss limit locks trading for the rest of that day. Breaching either limit terminates the account.

Use this calculator to track both simultaneously and always know exactly how much room you have before entering a trade.

How to use your drawdown buffer wisely

Your drawdown limit is not an invitation to lose that much money. Think of it as an emergency backstop, not a target. Most successful funded traders aim to use no more than 20–30% of their available drawdown buffer across any given week. This keeps you in the game long enough to recover from short-term losing streaks without the constant pressure of being close to termination.

As a rule of thumb, if you have lost more than half your available drawdown buffer, reduce your position sizes significantly until you rebuild. The cost of losing a funded account — in time, evaluation fees, and psychological capital — is far greater than the cost of a few smaller positions.

Common causes of drawdown breaches

Holding losing positions overnight without accounting for spread widening at open

Swap fees (overnight financing costs) that slowly erode your balance

Trading at maximum position size too early when your buffer is at its largest

Revenge trading after a bad session and doubling down on losses

On trailing drawdown accounts, profits made early lock in a permanently tighter floor

This calculator is for educational purposes only. Always verify your firm's exact drawdown rules on their official website before trading.