Funded trading programs come with a lot of rules and requirements, depending on the platform that you have chosen, and one of the most common rules that all platforms use, is mostly known as The Trailing Drawdown.
So what is a Trailing Drawdown? And how it works on Topstep, LeelooTrading and Earn2Trade.
What is The Trailing Drawdown?
Please understand first that this definition is general, there may be some differences between platforms that we will see in the next paragraphs.
The short definition:
The trailing drawdown is a term created by funded trading programs.
We can define it in many ways:
- A moving stop loss for the entire trading account that you are using.
- A moving value that determines the minimum account balance allowed.
- A variable value that determines the maximum losses that you can make in your trading account.
As you can see in all those three definitions, The trailing drawdown is not static, it is always moving during your trades.
If at any time your account balance is equal or less than the minimum balance given by the Trailing Drawdown, your trading account will be stopped and eliminated.
The detailed definition:
Let’s say that we are trading on a $50k trading account, and let’s say that the trailing drawdown is 2000$.
This means that your minimum account balance allowed is:
$50,000 – $2,000 = $48,000
But this value is not static.
What happens when I make profits with the Trailing Drawdown?
Let’s say that you started trading in this account and you made $500 in your first trade. Now your account balance is $50,500. This leads to a different minimum account balance allowed. The new minimum account balance is:
$50,500 – $2,000 = $48,500
What happens when I make losses with the Trailing Drawdown?
Let’s say that in your second trade, you made $200 losses. Now your account balance is $50,300. But your minimum account balance will not move, it will not move when you make losses.
So in other words:
- The trailing drawdown moves up only if the difference between “the balance” and “the minimum balance allowed” is more than $2,000.
- The trailing drawdown never moves down.
- When you make profits, it moves up.
- When you make losses, it doesn’t move.
This is why traders must respect the trailing drawdown carefully, since the pressure while trading will be higher when they make losses.
Especially that at any time your account balance is equal or less than the minimum balance given by the Trailing Drawdown, your trading account will be eliminated.
Here is an image that explains how the trailing drawdown generally works.
Are there differences between platforms about the Trailing Drawdown?
As we already said, the definition above is a general definition of the trailing drawdown, but every platform may have their unique characteristics when using it. Since the trailing drawdown is one of the most important rules included in funded trading programs, and one of the most exhausting rules for traders.
In the next paragraphs you will learn the characteristics of the trailing drawdown in every platform: Leeloo Trading, Earn2Trade and Topstep.
How does the EOD Drawdown work at Earn2Trade?
During the challenge: End of Day calculation
July 1, 2021, calculating the trailing drawdown has become much easier for Gauntlet Mini™ offered by Earn2Trade, because they don’t calculate it during trades, or at the end of a trade, but they calculate it at the end of the day.
This is why the Trailing drawdown at Earn2Trade is called: EOD Drawdown, means “End of Day Drawdown”
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
On your first day, you made as many trades as you want, you did win some trades and lose other trades, and at the end of the day, your balance is $50,150.
It doesn’t matter what you did during your trading day. Your trailing drawdown (EOD Drawdown) is calculated at the end of the day. So your minimum balance allowed now is $48,150.
N.B: you still need to respect the Daily Loss Limit.
In the Live funded account: Intratrade calculation
When you get funded by Earn2Trade, you may get one of 2 options:
LiveSim Account:
In the livesim account, the trailing drawdown is calculated exactly as in the challenge, this means at the end of the day.
Live account:
In a live account, the trailing drawdown is calculated intradetrade, that means it is calculated and increases in real-time based on unrealized profits.
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
Let’s say that you open your first trade in this account, the trade was at first successful and reached $523 profits ($50,523 in the account balance in real time), but you didn’t close the trade with that profit, and the profits drops until reaching only $115 ($50,115 in you account balance) then you close the trade.
In this situation, the trailing drawdown is calculated based on unrealized profits ($523) and not the realized profits ($115).
So your trailing drawdown at the end of this trade is:
$50,523 – $2,000 = $48,523.
When does the trailing drawdown stop at Earn2trade?
In the Gauntlet Mini™, The trailing drawdown will not follow your profits infinitely. When your minimum account balance reaches the initial balance, the trailing drawdown stops and never moves again.
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
When you make more than $2,000 profits in your account, your minimum balance will be $50,000, and it will never move again.
How does the Trailing Drawdown work at Leeloo Trading?
Intratrade calculation
In Leeloo Trading challenge or in the funded account, the trailing drawdown is calculated intradetrade, that means it is calculated and increases in real-time based on unrealized profits.
Example:
A $50k trading account with $2,500 trailing drawdown. So your minimum balance is $47,500.
Let’s say that you open your first trade in this account, the trade was at first successful and reached $523 profits ($50,523 in the account balance in real time), but you didn’t close the trade with that profit, and the profits drops until reaching only $115 ($50,115 in you account balance) then you close the trade.
In this situation, the trailing drawdown is calculated based on unrealized profits ($523) and not realized profits ($115).
So your trailing drawdown at the end of this trade is:
$50,523 – $2,500 = $48,023.
When does the trailing drawdown stop at Leeloo?
Leeloo Trading challenge
On the leeloo trading challenge, the trailing drawdown will never stop, as you make profits, the trailing drawdown will trail infinitely with your profits.
Leeloo Trading funded account
The are 2 options for Leeloo Trading funded account:
The Investor
The trailing drawdown in the Investor account stops when the minimum account balance reaches the initial balance plus $100.
For example for a $50k trading account, the trailing drawdown will stop trailing when your account balance goes above $52,600. And your minimum account balance allowed will be fixed at $50,100.
The Accelerator
There is no trailing drawdown in the Accelerator option from Leeloo Trading.
How does the Trailing Drawdown work at Topstep?
During the challenge: End of Day calculation
The trailing drawdown in the Trading Combine from Topstep is calculated at the end of the day.
It is exactly like the Trailing drawdown at Earn2Trade. This means that you can drop below the minimum account balance during the day, but you must return above the minimum account balance when the day ends.
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
On your first day, you made as many trades as you want, you did win some trades and lose other trades, and at the end of the day, your balance is $50,150.
It doesn’t matter what you did during your trading day. Your trailing max drawdown is calculated at the end of the day. So your minimum balance allowed now is $48,150.
N.B: you still need to respect the Daily Loss Limit.
In the Funded Account®: Intratrade calculation
In a Topstep funded account, the trailing drawdown is calculated intradetrade, that means it is calculated and increases in real-time based on unrealized profits.
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
Let’s say that you open your first trade in this account, the trade was at first successful and reached $523 profits ($50,523 in the account balance in real time), but you didn’t close the trade with that profit, and the profits drops until reaching only $115 ($50,115 in you account balance) then you close the trade.
In this situation, the trailing drawdown is calculated based on unrealized profits ($523) and not realized profits ($115).
So your trailing drawdown at the end of this trade is:
$50,523 – $2,000 = $48,523.
When does the trailing drawdown stop at Topstep?
In the Trading Combine by Topstep, The trailing drawdown will not follow your profits infinitely. When your minimum account balance reaches the initial balance, the trailing drawdown stops and never moves again.
Example:
A $50k trading account with $2,000 trailing drawdown. So your minimum balance is $48,000.
When you make more than $2,000 profits in your account, your minimum balance will be $50,000, and it will never move again.
What is the value of the Trailing Drawdown in every platform?
This table shows the Trailing Drawdown value for Topstep, Leeloo Trading and Earn2Trade.
| Earn2Trade | Topstep | Leeloo Trading | |
|---|---|---|---|
| $25,000 | $1,500 | —– | $1,500 |
| $50,000 | $2,000 | $2,000 | $2,500 |
| $75,000 | $2,750 | —– | —– |
| $100,000 | $3,500 | $3,000 | $3,000 |
| $150,000 | $4,500 | $4,500 | $5,000 |
| $250,000 | —– | —– | $6,500 |
| $300,000 | —– | —– | $7,500 |
Here is a summary of how the Trailing drawdown is calculated and when it stops trailing for a $50k trading account.
| The Account Type | TD calculation | Does it stop? |
|---|---|---|
| Leeloo Trading Challenge | Intratrade | No |
| Leeloo Trading Investor | Intratrade | Yes $50,100 |
| Leeloo Trading Accelerator | —– | —– |
| Earn2Trade Challenge | End of Day | Yes $50,000 |
| Earn2Trade LiveSim | End of Day | Yes $50,000 |
| Earn2Trade Live | Intratrade | Yes $50,000 |
| Topstep Challenge | End of Day | Yes $50,000 |
| Topstep Funded | Intratrade | Yes $50,000 |
Conclusion On Trailing Drawdown
The trailing drawdown is a critical feature in many funded trading programs, helping firms manage risk while pushing traders to maintain discipline. As Trading Funder has analyzed, platforms like Topstep, Leeloo Trading, and Earn2Trade each implement the trailing drawdown differently. For instance, during Topstep and Earn2Trade’s challenge phases, the drawdown is calculated at the end of the day, giving traders some flexibility. In funded accounts, however, it’s based on real-time profits, similar to how Leeloo Trading operates throughout its challenge. Leeloo’s Investor account offers relief by stopping the drawdown once profits reach a certain point, while the Accelerator option eliminates the trailing drawdown entirely. These variations are crucial, and Trading Funder helps traders understand and navigate these differences to choose the platform that aligns best with their trading style.
