The maximum total drawdown allowed from the initial account balance. Exceeding this limit fails the evaluation. Typically 8-10% across most prop firms.
Max drawdown rules vary significantly between firms. FTMO allows 10%, E8 Markets allows 8%, Topstep only 4%, and Lux Trading Firm 6%. The lower the max drawdown limit, the more conservative your position sizing must be. On a $100K account with 10% max DD, you can lose up to $10,000 total. With 1% risk per trade, that's 10 consecutive losses — unlikely but possible. With 2% risk, only 5 losses. Calculate your specific limits with PropWise's Position Size Calculator.