Why a static drawdown is fairer than a trailing one
Trailing drawdowns punish you for winning. Here is the arithmetic, and why we fixed ours at 12% of starting balance instead.
A trailing drawdown moves your floor up every time your balance makes a new high. Win early and the room you have left to be wrong gets smaller, not larger. That is a strange thing to do to someone you are trying to evaluate.
The arithmetic
Take a $10,000 bankroll and a 12% limit. Under a static rule your floor sits at $8,800 for the whole challenge. Under a trailing rule, a run to $11,500 drags the floor to $10,120 — above where you started.
- Static: the floor is set once, at entry, and never moves.
- Trailing: the floor follows your equity high, so profit tightens the noose.
- Daily loss limits are separate from both, and ours sits at 10%.
If a rule gets harder the better you do, it is not measuring skill. It is measuring luck and calling it discipline.
What we chose
A 12% static drawdown measured from your starting balance, on every plan, funded or not. Your floor is a number you can write down on day one and it will still be that number on day thirty.
That is a genuinely worse deal for us on the accounts that run hot early. We think it is the right one anyway, because the alternative quietly converts a skill test into a survival test.