Static Drawdown
A fixed maximum loss limit calculated from your starting account balance, not your peak balance.
Definition
A static drawdown (also called balance-based drawdown) is a loss limit set at a fixed dollar amount from your initial account balance. It never moves, regardless of how much profit you make. You could grow your account by 50% and your drawdown limit would still be based on where you started.
Example
On a $100K account with a 10% static drawdown, your account must never fall below $90,000 — no matter how high your balance gets. If you grow to $115K and then lose $26K in a drawdown, you breach the rule even though your net PnL is still positive.
Why It Matters
Static drawdowns give traders a clear, unchanging floor — many traders prefer the predictability. However, they can create large absolute drawdown risks if your account grows significantly, since the fixed floor becomes a smaller and smaller percentage of your peak balance.
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Related Terms
Trailing Drawdown
A drawdown limit that moves up as your account balance increases, but never moves down.
EOD Trailing Drawdown
A trailing drawdown that only moves up at the end of the trading day, not tick-by-tick during the session.
Max Drawdown
The overall account loss cap — the total amount an account can drop before the firm closes it.
Daily Drawdown
A per-day loss limit that caps how much an account can lose in a single trading day, separate from the overall max drawdown.
← All termsLast updated 2026-04-21