What is Drawdown?
The percentage decline from a peak equity value to a subsequent trough — measures how much your account has lost from its highest point.
Drawdown is the most important risk metric for traders and prop firm challengers. It measures how far your account has fallen from its peak before recovering.
Types of drawdown:
| Type | Definition |
|---|---|
| Absolute drawdown | Loss from starting balance |
| Relative drawdown | Loss from highest balance reached |
| Daily drawdown | Max loss in a single trading day |
Example: Your account peaks at $110,000 then falls to $99,000.
Drawdown = (110,000 − 99,000) / 110,000 = **10%**
Why it matters for prop firms:
Most prop firms (FTMO, FundedNext, BrightFunded) enforce hard drawdown limits:
Breach either limit and you fail the challenge — no exceptions.
Managing drawdown:
Compare drawdown rules across prop firms:
Related Calculators
FTMO Calculator
Track your FTMO daily drawdown limit in real time. Pre-configured for FTMO's 5% daily loss rule on Challenge and Verification accounts.
FundedNext Calc
Track your FundedNext daily drawdown in real time. Pre-configured for FundedNext's Stellar 2-Step daily loss limits across all account sizes.
BrightFunded Calc
Track your BrightFunded daily drawdown in real time. Pre-configured for BrightFunded's 5% daily loss limit across all account sizes.