Drawdown is the floor your account equity is not allowed to touch. Every prop firm enforces one, but the way the floor moves underneath you is what actually controls your trading day. The two most common variants you will see in futures evaluations are end-of-day (EOD) drawdown and trailing drawdown. They sound interchangeable. They are not.

End-of-day drawdown

With an EOD rule, your maximum allowed loss is recalculated only once per session, after the market close. Intraday spikes in equity do not lock in a higher floor, and intraday drawdowns are only measured against the level set at the previous close.

The practical effect: you can be aggressive intraday without permanently raising your minimum required equity. A trade that runs +$1,500 and then comes back to flat does not move your drawdown line. Only your closing balance matters for tomorrow's rule.

Trailing drawdown

A trailing drawdown follows your highest equity point — sometimes high-water-mark balance, sometimes peak unrealized P&L, depending on the firm. Every new high pulls your minimum allowed equity up by the same amount, and that floor typically does not retreat.

The result is that an intraday spike you do not lock in still costs you headroom. A run to +$1,500 followed by a giveback to flat can leave you with the same dollar buffer as if you had actually realized that profit, depending on whether the firm trails on balance or on peak unrealized.

Why it matters for sizing

Under EOD rules, scalpers and intraday traders can run larger size against the same nominal max-loss number, because giveback does not penalize them on tomorrow's floor. Under trailing rules, the same trader is paying a hidden tax every time price runs in their favor and then comes back. Two firms quoting "$2,000 max drawdown" on a 50K account can have meaningfully different effective risk depending on which model they use.

What to check before you buy

  • Is the trailing drawdown based on closing balance or on peak unrealized P&L? The latter is the most punitive variant.
  • Does the trailing drawdown stop trailing once you hit the profit target, or does it keep following you into the funded phase?
  • For EOD rules, is the recalculation based on the official session close, or on a different cutoff time? This matters for overnight holds and for late-session entries.

Neither model is universally better. EOD favors traders who take on intraday risk; trailing favors firms that want to protect their downside on volatile accounts. Pick the model that matches how you actually trade, not the one with the lower headline number.