Prop Firm Drawdown Calculator
Calculate your exact daily loss limit and max drawdown for FTMO, Tradeify, FundedNext, and other prop firms to avoid breaching rules.
If your equity drops below this figure today, you breach the daily limit.
Absolute lowest your account equity can ever drop.
Understanding Prop Firm Drawdown Rules
The Number One Reason Traders Lose Funded Accounts
More than 70% of prop firm challenge failures occur due to breaching the daily loss limit or max drawdown rules. Many traders mistakenly calculate their drawdown based on closed trades, but prop firms almost universally use floating equity. If your floating loss touches the limit for even a millisecond, the account is terminated.
Static vs. Trailing Drawdown
A static drawdown is tied to your initial balance. If you have a $100k account with a 10% max drawdown, your limit is always $90k. A trailing drawdown follows your highest account balance. If you make $5k profit (balance $105k), your trailing drawdown moves up. If your drawdown is 10%, your new threshold is $95k. Trailing drawdowns are significantly harder to manage.
Start of Day Balance Rules
For daily limits, most firms calculate the 5% threshold based on your balance at the start of the trading day (usually 5 PM EST). If you start the day at $102k, a 5% limit (based on the $100k initial balance) means you cannot let your equity drop below $97k today.
Frequently Asked Questions
Do prop firms use equity or balance for drawdowns?
Almost all reputable prop firms calculate drawdowns based on live floating equity. If you are in profit and let the trade turn into a massive loss, the floating negative value counts against your limit.
What happens if I breach the daily drawdown?
Your open trades will be automatically liquidated by the firm's risk management software, and your account will be immediately terminated. There are very rarely second chances without paying for a new challenge.
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