What is Max Drawdown on a Prop Firm?

Maximum drawdown is the total loss allowed from your initial balance across the entire evaluation period. Typically 8-12% depending on the firm. For a $100K account with 10% max DD, your balance cannot drop below $90,000 at any point. Unlike daily DD which resets each day, max DD is cumulative. Once your equity touches the max DD level, the challenge is over. This is why consistent, small risk per trade is essential.

← All FAQ (18 questions)