Maximum Drawdown
The overall loss limit from your starting balance (or peak balance) that, if hit, terminates your account permanently.
What is Maximum Drawdown?
Maximum drawdown (also called overall drawdown or total drawdown) is the hard account-termination limit. Unlike daily drawdown which resets, hitting the maximum drawdown immediately and permanently ends your challenge or funded account.
Industry standard
Most Forex prop firms set maximum drawdown between 8–12% of the starting balance:
- $100,000 account at 10% max drawdown = floor at $90,000
- If your account balance ever touches $90,000, the account is terminated
Relationship to daily drawdown
Think of it as two layers:
- Daily drawdown — daily speed limit (resets each day)
- Maximum drawdown — total fuel tank (never refills)
You can lose $3,000 every day for 3 days ($9,000 total) and still be within daily limits on each individual day — but you may have already breached the maximum drawdown.
How Firms Apply This Rule
FTMO: 10% max drawdown. Funding Pips: 8%. FundedNext: 10%. Apex Trader Funding: varies by account size with trailing mechanics.
Related Terms
Trailing Drawdown
A drawdown limit that moves up as your account balance increases, locking in a higher floor rather than staying fixed from the start.
Static Drawdown
A fixed maximum loss limit calculated from your starting account balance that never changes regardless of profits made.
Daily Drawdown
The maximum amount you are allowed to lose within a single trading day before your account is automatically suspended.