Drawdown Type
Definition
Drawdown type refers to the specific method a prop firm uses to calculate drawdown limits. The main types are balance-based, equity-based, trailing intraday, and trailing end-of-day, each with different implications for risk management.
Understanding your firm's drawdown type is critical because the same account balance can be safe or violated depending on the calculation method. Balance-based drawdown measures from your account balance (closed trades only). Equity-based drawdown includes open positions, meaning floating losses count against you in real-time.
Trailing drawdown adds another dimension — the floor moves up with your equity. Intraday trailing adjusts the floor based on your highest equity at any point during the day, while end-of-day trailing only adjusts based on your equity at market close. The intraday version is more restrictive because even momentary equity spikes raise your floor.
FTMO uses equity-based fixed drawdown. Topstep uses intraday trailing drawdown. Apex uses end-of-day trailing. These differences significantly affect how you should manage trades. PropJournal is configured for each firm's specific drawdown methodology, so you always see accurate calculations.
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