9 Prop Firms With Different Approaches to Equity-Based Drawdown

One of the most important factors to look at when choosing a prop trading firm is the equity based drawdown, which will directly affect how much risk a trader can take before breaking the firm’s rules. But not all prop firms do the drawdown calculation the same way. Some use static limits, others use trailing thresholds or end-of-day calculations.

In this guide I will discuss Prop Firms With Different Approaches to Equity-Based Drawdown, how they calculate it, their loss limits, breach conditions and the key differences between the firms to assist traders to make more informed choices.

How to Choose the Right Prop Firm Based on Drawdown Rules

Understand Types of Drawdown Learn to understand the difference between static, trailing and dynamic drawdown to find the right structure for your trading strategy, risk tolerance and how you want to handle your account.

Review Maximum Loss Limits: Look at the maximum drawdown percentage or dollar amount for each firm to see how much the account equity can decline before it causes a breach.

Check Daily Loss Limits: Select a company whose daily loss limits are compatible with your trading frequency, average position size and possible market volatility, without luring you into taking too much risk.

Check how equity is calculated. Learn how companies compute drawdown (balance, equity, floating losses, commissions and swaps) to prevent surprising breaches when positions are open.

Learn About Trailing Threshold Rules Understand when trailing limits change, whether unrealized gains affect them, and if thresholds stop moving once certain account levels are reached.

Compare Intraday and End-of-Day Rules: Choose whether live equity monitoring or end-of-day threshold modifications better fit your trading style, especially during volatile periods and for overnight holdings.

Know What Happens When You Breach. Find out if you will be terminated, forced to liquidate your positions or fail your evaluation if you hit a drawdown threshold. What restrictions or exceptions exist?

Check Account Details: Before paying any fees, review the official rules for your chosen evaluation and funded account, which include payout eligibility, scaling policies, and any recent rule changes.

9 Prop Firms With Different Approaches to Equity-Based Drawdown List

1. FTMO – Uses a static maximum drawdown model with a fixed loss limit that does not increase as account equity grows, giving traders more flexibility after profits.
2. FundedNext – Applies a static drawdown structure where the maximum loss threshold remains fixed rather than trailing rising equity.
3. The5ers – Uses equity-aware risk monitoring with strict drawdown limits, and some programs calculate daily loss using the higher of balance or equity.
4. Topstep – Employs an intraday trailing drawdown that follows the account’s highest real-time equity, making drawdown management more demanding.
5. Apex Trader Funding – Uses an end-of-day trailing drawdown where the drawdown floor adjusts based on closing account values rather than intraday equity peaks
6. MyFundedFX – Operates with a static drawdown model, keeping the maximum loss threshold fixed throughout the evaluation
7. Funding Pips – Uses a trailing balance-based drawdown that rises with the highest closed account balance achieved.
8. BrightFunded – Implements a trailing equity drawdown, where the drawdown floor increases with intraday equity highs, including unrealized profits.
9. E8 Markets – Uses an equity-based drawdown framework that evaluates account risk using real-time equity, including floating profit and loss, rather than balance alone

1. FTMO

FTMO has different drawdown methods for different account models. The 1-Step model applies a maximum loss limit of 10% which is trailing the highest recorded daily balance recalculated at midnight CE(S)T, whereas the 2-Step model usually applies a static maximum loss limit of 10%.

Daily loss limits also apply, 3% for 1-Step and 5% for 2-Step. Profit or loss on open positions, swaps and commissions are included in the equity calculations.

It is against the rules to breach an applicable threshold. Traders should ALWAYS check their own FTMO Challenge and funded-account conditions BEFORE trading.

2. FundedNext

FundedNext offers several account types with varying drawdown limits. It does have a 5% daily loss limit and 10% max loss limit on its Stellar 2-Step challenge and 3% daily and 6% max loss on Stellar 1-Step. Stellar Lite has a daily and maximum loss limit of 4% and 8% respectively.

The balance and equity are monitored including floating losses, swaps and commissions. Daily limits reset at midnight server time. The maximum loss floor depends on account model. Traders should verify the exact rules of their plan. To breach the account, it is not permitted to hit a forbidden loss threshold.

3. The5ers

The5ers are using equity-based stop-out levels. Drawdown percentage varies depending on the program. For example, of the published examples, its Hyper Growth program has a max drawdown of 6%, High Stakes has a max drawdown of 10%, and Bootcamp has a max drawdown of 5%. Your account can fall to a minimum of the equity stop-out level.

If losses are made on open positions, they can be closed and the balance still looks healthy. Where there are profits, the drawdown allowance can be increased according to the relevant program rules. Any withdrawals are taken out of the available allowance. Traders should review the particular program and payout conditions of their program before calculating the effective loss threshold.

4. Topstep ​

Unlike many other firms that use percentage-based forex drawdown structures, Topstep focuses on futures trading and utilizes a Maximum Loss Limit (MLL). The limit increases with growth in end of day balance but never decreases The MLL is putting in $2,000 toward a $50,000 Trading Combine, $3,000 toward a $100,000 combine and $4,500 toward a $150,000 combine.

The limit is monitored in real time including unrealized profit and loss but the upward adjustment of the limit is based on end of day balance growth. # Crossing the threshold means liquidation. The results vary depending on the stage of the account.

5. Apex Trader Funding

Apex Trader Funding offers futures traders both intraday trailing and end of day drawdown models. In its intraday model, the threshold is the highest real-time peak balance including unrealized gains and it never moves down. Published evaluation limits are $1,000 for a $25,000 account, $2,000 for $50,000, $3,000 for $100,000 and $4,000 for $150,000.

In the EOD model, the threshold is calculated at the end of the market and is used for the next session. If the relevant threshold is met or crossed, positions are closed out and the evaluation or funded account can be closed down.

6. MyFundedFX

MyFundedFX is associated with forex prop-trading evaluation accounts. To compare it, please check its current availability and official rules. Historical descriptions state a two phase evaluation with a first phase profit target of 8% and a second phase target of 5%, with a daily loss limit of 5% and an overall drawdown of 8%.

These figures should not be relied upon as guarantyd current terms without confirmation from the official documentation of the firm. When comparing equity-based, consider whether floating losses are included, if the overall floor is static or trailing, how daily losses reset, and what happens when a threshold is hit

7. FundingPips

FundingPips has several evaluation models, so the drawdown rules will depend on which plan you’re on and when you opened your account. Its published rules provide for models with static maximum loss floors and models with trailing thresholds.

The maximum-loss level is set after the equity peak in the recorded trailing structure, and is frozen when the equity is 5% above the initial account balance, effectively locking the floor at the initial balance.

A daily loss can be calculated from the opening balance or equity and includes floating and closed losses. If an applicable threshold is breached, the account may be closed immediately. Traders should check their exact model percentages and current rules.

8. BrightFunded

Static and trailing drawdown structures are available within its evaluation plans. In its published rules, the 2-Step Bright plan offers an 8% static maximum drawdown and a 4% daily loss limit, while the 2-Step Classic plan offers a 10% static maximum drawdown and a 5% daily loss limit.

Its 1-Step plan has a 6% maximum trailing drawdown and a 3% daily loss limit. Daily thresholds are reset close to the platform’s rollover time. Breaches are determined based on both equity and balance, including losses on open positions. Traders are advised to review the applicable plan before trading.

9. E8 Markets

E8 Markets employs different drawdown mechanisms in its E8 One and E8 Pro programs. E8 The drawdown is dynamic, based on the highest closed balance. The threshold increases as profitable trades close, not as floating equity hits a new high.

The documented example of a dynamic drawdown is 6% but the E8 One preset rules also include a dynamic limit of 4%. The E8 Pro is statically drawn down, for instance to 8%.

Daily loss limits are calculated individually and reset on a daily basis. Traders should check the settings of their chosen model as reaching an applicable loss threshold can permanently breach the account.

Common Drawdown Breach Conditions and Account Termination Rules

Breach of Maximum Drawdown: If the account equity falls below the maximum loss threshold, traders can breach the rules of the firm, which may lead to the termination of the account or the failure of the evaluation.

Crossing Daily Loss Limits: Firms have daily loss limits, including eligible realized and unrealized losses. Violating these limits may lead to an immediate account suspension or termination.

Floating losses on open trades. If a position is open, floating losses may bring the equity below the drawdown limit, which may result in forced liquidation or closure of the account.

Violation of Trailing Drawdown Rules: Some firms will increase drawdown limits as the account balance or equity increases. A breach below these dynamic thresholds could have immediate breach implications.

Not considering EOD calculations – traders may misunderstand when the drawdown levels are refreshed. Not doing end-of-day calculations may lead to unforeseen breaches in the following trading days.

Risk limits applicable to accounts: Each account type has its specific loss limits and risk conditions. Incorrect thresholds can result in rule violations and loss of account eligibility.

Loss of Required Equity A firm may be automatically refused access to trading if its equity falls to or below its specified breach level regardless of any open positions or the potential for recovery.

Consequences of Drawdown Violation: Breaching the drawdown can lead to a failed evaluation, account termination, position liquidation, or payout ineligibility, depending on the firm’s policies. Please check current rules before trading.

Conclusion

Knowing how equity-based drawdown rules influence trading decisions and account survival is key when choosing the right prop firm. FTMO, FundedNext, The5ers, Topstep, Apex Trader Funding, MyFundedFX, FundingPips, BrightFunded, and E8 Markets use different drawdown limits, equity calculations, trailing mechanisms, and breach conditions.

Some establish fixed thresholds. Others have thresholds that depend on account performance or end-of-day balances. Look at daily loss limits, floating losses, account types and termination policies and compare before choosing a firm. Ultimately, understanding these rules helps you to manage risk in a disciplined way, make better decisions and trade more consistently.

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