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Drawdown threshold lock

Drawdown Lock

Risk management

Definition

The point at which the trailing drawdown stops rising and remains fixed. In most firms, this happens when the floor reaches the starting balance, or the starting balance plus $100. From that moment, any additional profit moves the account further away from the floor.

Detailed explanation

Until the lock, every profitable day brings the floor closer to you by the same amount, so the distance from the threshold does not increase. After the lock, the situation reverses: a profit of $1,000 also means an additional $1,000 of safety margin. Hence the common logic in a funded account: first, reach the lock point with a cautious position size, and only then increase it. In some firms, the first payout also locks the threshold, so check what happens to the floor after a payout.

An example from the prop world

In FTMO Futures, in a 50K Growth account with a $2,000 threshold, the drawdown floor starts at $48,000 and rises according to the end-of-day balance. Once the end-of-day balance reaches $52,000, the drawdown floor locks at $50,000 and no longer moves.

How it works at the firms on this site

Based on the rules listed on our firm pages. Rules get updated, so check the firm's page before buying.

Trailing drawdown

A drawdown threshold that rises with the account's peak and never goes down. As the account makes money, the floor follows it up at the same distance, until a lock point the firm defines.

Static drawdown

A drawdown threshold set relative to the starting balance that doesn't move when the account makes money. The floor stays in place, so every profit moves the account further away from it.

End-of-day (EOD) trailing drawdown

End-of-day drawdown (EOD Drawdown) is a trailing maximum loss limit rule in which the loss threshold moves up only once a day, based on the closing balance. At most firms, however, the threshold itself is enforced in real time, so touching it during the trading day fails the account.

safety cushion

The amount of profit that must build up in the funded account before you're allowed to withdraw. The profit inside the cushion stays in the account, and only what's above it is available for payout.

Intraday trailing drawdown

This is a risk management limit calculated continuously in real time throughout the trading day. It tracks the account's peak balance (including realized profits and unrealized profits from open positions), so the loss threshold always rises together with the peak balance while keeping a fixed distance, but never goes down; crossing this threshold at any moment (even for a single second) causes immediate failure or closure of the account.

Maximum loss limit

The maximum amount an account may fall below its reference point before it's disqualified. At prop firms it's also called the MLL (Maximum Loss Limit), and each firm calculates it differently: intraday trailing, end-of-day trailing or static.