Trailing Drawdown Explained
The most misunderstood rule in prop trading. This guide covers how trailing drawdown is calculated, why FTMO’s method changed in 2026, and exactly how to protect your account.
What is Trailing Drawdown?
Trailing drawdown is a risk management feature that adjusts your maximum drawdown limit as your account grows. Instead of being fixed at the initial 10% of your starting capital, it “trails” your highest account balance.
How Trailing Drawdown Works
When you start a challenge, your initial drawdown limit is set (e.g., $10,000 on a $100,000 account = 10%). As you make profits and your account balance increases, the drawdown limit automatically adjusts upward.
Why FTMO Changed Their Method
FTMO introduced a more trader-friendly trailing drawdown system in 2026 that protects your profits while giving you more flexibility.
Strategies to Avoid Being Stopped Out
Learn the key strategies to manage trailing drawdown effectively and avoid unnecessary stop-outs.
