Drawdown and loss limits · Rookie
Drawdown
What does Drawdown mean?
Drawdown measures a decline from a previous account peak to a subsequent low. In prop programs, the word also commonly refers to the permitted loss amount or threshold.
Example
An account falls from $24,000 to $22,800, a $1,200 or 5% peak-to-trough drawdown.
Illustrative example; not a provider’s quoted offer.Why it matters for prop traders
Separate a historical performance statistic from the provider’s rule for closing or restricting an account.
Sources and further reading
The following primary sources support the terminology. Provider rules describe their own products and may change.