In short. A static drawdown is a fixed loss limit that never moves: on a 50K account with a $2,000 static drawdown the account is breached at $48,000 whatever the balance did before. It is the simplest rule and usually comes with a smaller amount than a trailing drawdown of the same account size.
Static drawdown rewards gaining a cushion: once the account is up $1,000 the room is $3,000 below the balance. The flip side is a tighter starting room, so the first days are the most exposed.
A few firms let the trader choose between static and trailing at purchase ('trader's choice'). The board shows the drawdown type of each firm's reference account and lists every type the firm sells on the firm page.
Questions traders ask
What is Static drawdown?
A static drawdown is a fixed loss limit that never moves: on a 50K account with a $2,000 static drawdown the account is breached at $48,000 whatever the balance did before. It is the simplest rule and usually comes with a smaller amount than a trailing drawdown of the same account size.