Static Drawdown

Context & Mechanics

How it works

The static drawdown is the simplest form of the overall loss limit at a prop firm: the loss floor is set once at the start – typically 8–10 % below the starting capital – and never moves afterwards. On a nominal $100,000 account at 10 %, the floor sits permanently at $90,000. If equity rises to $106,000, the usable buffer grows to $16,000; the floor itself stays put.

How it differs from a trailing drawdown

The difference to a trailing drawdown is economically significant: there, the floor ratchets up with every equity high, so interim profits do not permanently enlarge the buffer. With a static drawdown, realised profits act like a self-built safety cushion. Historically, many two-step challenges use static total limits, while one-step and instant-funding models more often apply trailing logic – the exact design varies by provider.

Calculation details

Definitions decide here too: does equity including open positions count, or only balance? Is the floor checked intraday or only at end of day (EOD)? Does the percentage refer to the starting capital or – more rarely – to the previous day's balance? A trader who cannot answer these three questions does not know their actual limit. The daily loss limit applies additionally and independently.

Why it matters for traders

A static drawdown rewards a conservative start: building an early profit cushion means trading with considerably more room afterwards – a structural advantage over trailing accounts, where the distance stays constant. The most common mistake is nevertheless the same: reading the buffer as a licence for bigger positions instead of managing it as a reserve. The GlanWick simulator lets traders compare static and trailing loss floors directly – GlanWick is a training and simulation tool and not a prop firm itself.

Execution Example

A trader runs a two-step challenge on a nominal $100,000 account with a 10 % static drawdown (fixed floor $90,000, equity basis, checked intraday) and a 5 % daily loss limit.

Start: equity $100,000, fixed floor $90,000, buffer $10,000.
A winning streak lifts equity to $106,000 → the floor stays at $90,000; the buffer grows to $16,000.
A multi-day losing phase down to $91,500 → the account survives (remaining buffer $1,500); no single day breaches the $5,000 daily loss limit.
A further daily loss of −$2,000 pushes equity to $89,500 → floor breached, challenge ended. With a trailing floor (after the $106,000 peak: floor $96,000) the account would already have failed at $96,000.

Execution Risk & Errors

Confusing the provider's static and trailing drawdown

Reading the profit cushion as a licence for bigger positions

Not distinguishing equity and balance basis of measurement

Not knowing whether checks are intraday or end of day

Losing sight of the daily loss limit that applies in addition

Frequently Asked

What is the difference between a static drawdown and the overall loss limit?

The overall loss limit is the umbrella term for the total loss cap; a static drawdown is the variant where that cap sits fixed below the starting capital and does not move.

Do profits enlarge my buffer under a static drawdown?

Yes. Since the floor stays put, the usable distance grows with every realised profit – the key difference to a trailing drawdown, where the distance stays constant.

Is a static drawdown better for traders?

Historically the static variant is considered milder because profits permanently increase the room to manoeuvre. Providers sometimes compensate with stricter other rules – the overall comparison matters.

Can I compare static and trailing conditions in advance?

Yes. The GlanWick simulator lets you run both drawdown variants with identical parameters risk-free and compare them directly.