Does an open position count toward my drawdown?

Yes. Both the daily and the maximum limit are measured on equity, which includes unrealised profit and loss. A losing position you are still holding is already consuming your allowance, and holding it longer does not postpone the breach.

When does the daily drawdown limit reset?

At the UTC day boundary. It is measured from the equity you held at the start of that UTC day, so a trader in a different timezone should check when their own trading session falls relative to UTC midnight.

What is the difference between a static and a trailing drawdown?

A static floor is fixed at starting capital minus the allowance and never moves. A trailing floor re-anchors upward to every new equity peak and never falls back. At the same percentage, a trailing account is meaningfully harder, because giving back profit can breach you while you are still in profit overall.

Can I breach the maximum drawdown while still being profitable?

Under a trailing anchor, yes. The floor follows your highest equity peak, so a large give-back can cross it even though your balance is above where you started. Under a static anchor this cannot happen — the floor stays at starting capital minus the allowance.

Does the maximum drawdown reset between trading days?

No. Only the daily limit resets at the UTC boundary. The maximum drawdown floor applies across the entire evaluation, which is why a series of moderate losing days can end an account that never had one bad day.

How to calculate drawdown in a prop firm challenge

September 11, 20269 min read

Drawdown is what ends most evaluations. Not the profit target — that is a finish line you walk toward at your own pace, and nobody fails for being slow.

Drawdown is a floor underneath you. Touch it and the account is over, whatever your balance was an hour earlier.

It is also the rule traders most often misread, because two accounts can advertise the same percentage and behave nothing alike. This article works through both limits with real arithmetic, then shows the one distinction — where the floor is anchored — that decides which kind of account you actually bought.

There are two separate limits, and they are checked differently

Every evaluation here enforces two independent drawdown rules. Breaching either ends the account. They are not two views of one number: a trader can sit comfortably inside the maximum and still breach the daily limit before lunch.

Daily drawdown — how much you may lose within a single UTC day, measured from that day's starting equity.
Maximum drawdown — how far below the account's floor your equity may ever fall, measured across the whole evaluation.

The daily limit resets at the UTC day boundary. The maximum does not reset at all. That asymmetry is the whole reason a trader can survive a bad Tuesday and still fail on Friday without ever having a single catastrophic day.

Daily drawdown, worked through

Daily drawdown is measured from the equity you started the UTC day with — not from your peak during the day, and not from your balance excluding open positions. Unrealised losses count. A position you are still holding at a loss is already consuming your daily allowance.

That last point is where most breaches come from. A trader closes the day's losing trades, sees a manageable realised loss, and holds one position that is deeply underwater — reasoning that nothing is lost until it is closed.

The engine does not agree. Neither does any serious prop firm.

Maximum drawdown, and where the floor is anchored

Maximum drawdown is a single floor, and the only question that matters is what that floor is measured from. There are two answers, and they produce very different accounts at identical percentages.

A static anchor fixes the floor at starting capital minus the allowance. It never moves. Profits raise your distance from it, but the floor itself stays where it started.
A trailing anchor re-anchors the floor to every new equity peak. Each new high drags the floor up behind you — and it never comes back down.

This is why quoting a drawdown percentage without naming its anchor is close to meaningless. The rulebook on this site names the anchor for every tier, and the live figures are generated from the same configuration the engine judges against.

How to check your own numbers

You do not have to take a verdict on trust here. Every fill is derived from recorded oracle prices, and the same prices are available to replay — so if an account breached, you can reconstruct the equity curve that breached it and find the exact tick.

Note the UTC day boundary. Daily drawdown resets there, not at your local midnight.
Include unrealised profit and loss. Open positions count toward both limits at their current mark.
Identify your anchor. A static floor never moves; a trailing floor sits under your highest equity peak.
Measure from the right base — day-start equity for the daily limit, the anchored floor for the maximum.

Do this once with real numbers and the rules stop being abstract. Most traders who breach were not reckless. They were measuring from the wrong base, and believed they had more room than they did.

Common questions

Does an open position count toward my drawdown?: Yes. Both the daily and the maximum limit are measured on equity, which includes unrealised profit and loss. A losing position you are still holding is already consuming your allowance, and holding it longer does not postpone the breach.
When does the daily drawdown limit reset?: At the UTC day boundary. It is measured from the equity you held at the start of that UTC day, so a trader in a different timezone should check when their own trading session falls relative to UTC midnight.
What is the difference between a static and a trailing drawdown?: A static floor is fixed at starting capital minus the allowance and never moves. A trailing floor re-anchors upward to every new equity peak and never falls back. At the same percentage, a trailing account is meaningfully harder, because giving back profit can breach you while you are still in profit overall.
Can I breach the maximum drawdown while still being profitable?: Under a trailing anchor, yes. The floor follows your highest equity peak, so a large give-back can cross it even though your balance is above where you started. Under a static anchor this cannot happen — the floor stays at starting capital minus the allowance.
Does the maximum drawdown reset between trading days?: No. Only the daily limit resets at the UTC boundary. The maximum drawdown floor applies across the entire evaluation, which is why a series of moderate losing days can end an account that never had one bad day.