Live trailing drawdown — A trailing drawdown that updates in real time on unrealised equity, so an intraday high raises the breach level even if the trade closes flat.
How live trailing drawdown works in prop trading
This is the strictest common drawdown mechanic. The floor tracks your peak equity tick by tick, so a position that runs 30 ticks in your favour and then reverses has already moved your breach level up by the value of those 30 ticks. Nothing has to be closed for it to count.
It changes correct trade management. Scaling out of winners protects drawdown room that letting a runner retrace destroys; a wide stop behind a large open profit is far more expensive than the same stop on a fresh entry. Traders who breach live-trailing accounts usually do so on a trade that was green, not on a loser.
Key points
- Peak unrealised equity sets the floor — you do not have to close a trade for it to count against you.
- Give-back on an open winner is the leading cause of breach on these accounts.
- Partial profit-taking is defensive here, not just a preference.
- Check whether the firm measures on equity intraday or only on closed balance; the difference is often several hundred dollars of room.
Example
$50,000 account, $2,000 live trailing drawdown. A long runs to +$1,200 unrealised, then you stop out at -$300. Peak equity was $51,200, so the floor is $49,200 and your balance is $49,700 — $500 from breach after a $300 loss.
Also known as
- intraday trailing drawdown
- real-time trailing
- equity trailing drawdown
Frequently asked questions
What is the difference between live trailing and end-of-day drawdown?
Live trailing updates continuously on unrealised equity during the session. End-of-day drawdown only recalculates once, using your closing balance, so intraday spikes and give-backs do not move the floor. End-of-day is substantially more forgiving for the same dollar allowance.
How do you trade a live trailing drawdown account?
Scale out rather than holding for a full target, keep stops tight relative to the remaining floor, and check the floor — not the balance — before sizing each trade. Many traders treat the peak equity of the day as their working balance.
Put this into practice
Live trailing drawdown is described here as a plain-language educational definition. Firms, platforms, and account programs may apply different conditions or calculations. Verify the current official terms before using this definition to make an account decision.