Overall Drawdown Limit

What is an Overall Drawdown Limit?

The overall drawdown limit is the maximum total loss your account can sustain before the prop firm closes it. If you start with $100,000 and the overall limit is 10%, your account cannot drop below $90,000 at any point — including unrealized losses on open positions.

Static vs Trailing Overall Drawdown

• Static drawdown: The limit is fixed from your starting balance. Start at $100K with 10% limit = floor is always $90K, regardless of how high your balance goes
• Trailing drawdown: The floor moves up with your highest balance. If you grow to $105K, the floor moves to $95K. This means profits can actually increase your risk of hitting the limit if you then draw down

Strategy Implications

Trailing drawdown is significantly harder to manage because every new equity high raises the floor. With a trailing 10% limit, if you grow your $100K account to $108K, your floor is now $97.2K — only $10.8K from your starting balance. Some traders deliberately slow their profit rate to avoid raising the floor too quickly, especially early in challenges.