Implementation guide · Prop Evaluation Rules
Trailing Drawdown: High-Water Marks and Floor Caps
Track a moving loss floor through new peaks and declines, with an optional cap example and checks for balance, equity and sampling differences.
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Published by FxTrusts, a supplier of brokerage and prop firm technology. Prepared with AI-assisted research and drafting; reviewed against the cited public sources. Examples are illustrative. Product links describe our services.
Quick answer
A trailing drawdown floor moves according to a defined peak or reference update rule. A simple model subtracts a fixed allowance from the highest eligible account value seen so far. Specify whether it trails balance or equity, when peaks update and whether the floor eventually stops rising.
Define what qualifies as a new peak
An intraday equity peak, a closed-balance peak and an end-of-day balance peak can produce different floors. An open gain may count in one model and not another. The update schedule is therefore part of the rule, not an implementation detail that can be chosen later. Provider and platform documents show different risk-setting behavior; use the exact program terms instead of importing a generic trailing-stop analogy.
Preserve state when the account falls
Under the simple peak-minus-allowance model used here, the peak does not decrease when the current account value declines. The floor therefore remains raised after profits retrace. A calculation that uses only current equity minus the allowance would move the floor downward and would no longer implement that model. Store the eligible peak, its timestamp and the rule version so the state can be reconstructed after a restart or data correction.
A cap is an additional rule
Some models stop raising the floor once a stated level is reached; others do not. A capped model can be expressed as the smaller of a declared cap and the uncapped candidate floor, assuming that matches the actual terms. Payouts, resets or stage transitions may introduce separate adjustments. Do not assume a cap at initial capital, or any reset behavior, merely because another provider uses one.
Test the path, not only the final value
Two accounts ending at the same equity can have different floors if they reached different qualifying peaks. Acceptance tests should include a new peak, a decline, a return to the peak and a point beyond an optional cap. Missing intraday observations can also hide an eligible high point. If data quality is insufficient, preserve the uncertainty and escalate rather than fabricating the path or silently selecting a more favorable floor.
An uncapped and capped fictional model
Assume initial value 100,000, a fixed 10,000 allowance and peaks updated from each observed equity value. The alternative capped model stops the floor at 100,000. Both models are synthetic. At a 113,000 peak, the uncapped floor is 103,000 while the capped floor is 100,000. A later decline does not reduce either stored peak.
| Observed equity | Eligible peak | Uncapped floor | Capped floor |
|---|---|---|---|
| 100,000 | 100,000 | 90,000 | 90,000 |
| 105,000 | 105,000 | 95,000 | 95,000 |
| 102,000 | 105,000 | 95,000 | 95,000 |
| 113,000 | 113,000 | 103,000 | 100,000 |
| 106,000 | 113,000 | 103,000 | 100,000 |
Implementation checklist
- Declare balance or equity peak and the exact update schedule.
- Persist the eligible peak independently of current account value.
- Document caps, resets, payouts and stage-transition adjustments explicitly.
- Test identical closing values reached through different account paths.
Sources
These documents support the reference. Check the original publication for current requirements and the limits of its scope.
- TopstepX risk-setting behaviorhelp.topstep.com
- MQL5 account propertieswww.mql5.com
- FTMO program-specific trading objectivesftmo.com
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