Drawdown rules are the single most important thing to understand before you take a prop firm challenge. Break the maximum drawdown and your account is gone — target or no target. The two models you will meet are static and trailing drawdown. Here is exactly how each works.
What is maximum drawdown?
Maximum drawdown is the lowest your account is allowed to fall before it breaches. It is measured from a reference point — and that reference point is what makes a drawdown either static or trailing.
Static drawdown
A static maximum drawdown is fixed from your starting balance and never moves. On a $100,000 account with a 6% static drawdown, your floor is $94,000 — permanently. Whether your equity climbs to $110,000 or $130,000, the breach level stays at $94,000. Static drawdown is easier to reason about and more forgiving once you are in profit. Propulse uses a 6% static maximum on the 1-Step and 2-Step Runs.
Trailing drawdown
A trailing maximum drawdown follows your account upward. It is measured from your highest equity (or balance) point, so as you make money, the floor rises with you. On a $100,000 account with a 5% trailing drawdown, your floor starts at $95,000 — but if your equity peaks at $108,000, the floor trails up to $102,600. Trailing drawdown protects profits you have made, but it is stricter: a big winner followed by a giveback can breach you even while you are still above your starting balance. Propulse uses a 5% trailing maximum on the Instant Run.
Static vs trailing, side by side
| Static (6%) | Trailing (5%) | |
|---|---|---|
| Reference point | Starting balance | Highest equity reached |
| Floor at start ($100K) | $94,000 | $95,000 |
| After peak of $108K | $94,000 | $102,600 |
| Best for | Letting winners run | Locking in gains |
Don’t forget the daily drawdown
Separate from the maximum, most firms also enforce a daily drawdown — a limit on how much you can lose in a single day, reset at midnight UTC. Propulse sets this at 3% across all paths. You can breach the daily limit without touching your maximum, so both matter.
How to trade within the rules
- Size positions to your daily limit first. It is the one you are most likely to hit intraday.
- On a trailing account, bank profits. Taking payouts locks in gains before a giveback can trail into them.
- Know your exact floor at all times. Static is a fixed number; trailing is a moving one — track it.
Every Propulse limit is enforced server-side and published up front — see the full ruleset on the how it works page, or read how payouts work to see how banking profit interacts with a trailing account.