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TakeProfitTrader Rule 3: EOD Trailing Drawdown Explained

Written by Paul

Published on

January 6, 2026

TakeProfitTrader's Rule 3 enforces end-of-day (EOD) trailing drawdown calculated at 5:00 PM ET daily market close, tracking the maximum loss allowed from your account's peak balance rather than starting balance—meaning if you grow a $50K account to $53,000 (new peak), your violation threshold moves from $47,500 to $50,500, giving you $2,500 drawdown room from the higher peak instead of the original starting point.

This EOD calculation differs from intraday drawdown (which some prop firms use) because unrealized losses during the trading session don't count toward the limit—only your settled balance at 5:00 PM ET close determines if you're in violation, allowing intraday drawdowns exceeding the $2,500 limit as long as you recover before market close. Understanding EOD vs starting drawdown, how peaks adjust after profits, and strategic use of the daily reset window prevents violations that lock accounts and require $449-1,499 reset fees.

Quick heads-up: This article is based on my real experience with TakeProfitTrader and the info available when I published/updated this. Things change in prop trading — rules, payouts, promos, all of it.

For the absolute latest, check TakeProfitTrader´s website or their knowledge base.

Rule 3 Definition: EOD Trailing Drawdown

Official rule:

Your account balance at 5:00 PM ET daily close cannot drop more than $2,500 (for $50K accounts) below your highest peak balance.

Key components:

EOD calculation: Measured at market close, not intraday
Trailing: The drawdown limit "trails" your peak balance upward
Peak balance: The highest your account has ever reached
Violation threshold: Peak - $2,500 (for $50K accounts)

EOD vs Intraday Drawdown

EOD drawdown (TakeProfitTrader's Rule 3):

Measured: At 5:00 PM ET market close
Allows: Unlimited intraday drawdown as long as you recover by 5:00 PM
Violation trigger: Balance at 5:00 PM ET close below threshold

Example:

Peak: $53,000
Violation threshold: $50,500

During trading day:

9:30 AM: Balance $53,000
11:00 AM: Drop to $49,000 (below violation threshold)
2:00 PM: Recover to $51,500
5:00 PM: Close at $51,500

Result: No violation (closed above $50,500)

Intraday drawdown (what some other firms use):

Measured: Continuously throughout day
Violation trigger: ANY moment balance drops below threshold

Same scenario with intraday rules:

11:00 AM: Balance hits $49,000
Instant violation (even though you later recovered)

Why TPT uses EOD:

More forgiving. Gives traders room to recover from intraday losses.

For max drawdown overview: https://proptradingvibes.com/blog/takeprofittrader-max-trailing-drawdown

How Peak Balance Works

Peak balance = highest balance your account has ever reached

Starting scenario:

Account activates: $50,000
Initial peak: $50,000
Violation threshold: $47,500

After profit:

Day 5: Make $3,000 profit, balance now $53,000
New peak: $53,000 (moved up)
New violation threshold: $50,500 (moved up)

Key insight: Peak only goes UP, never down (unless you withdraw or reset).

After loss:

Day 10: Lose $1,500, balance now $51,500
Peak stays: $53,000 (doesn't drop)
Violation threshold stays: $50,500

After withdrawal:

Day 20: Withdraw $2,000, balance now $51,000
New peak: $51,000 (withdrawal lowers peak)
New violation threshold: $48,500

Drawdown Amounts by Account Size

Account Size	Max Trailing Drawdown	Percentage	Starting Violation Point
$25,000	$1,250	5%	$23,750
$50,000	$2,500	5%	$47,500
$100,000	$5,000	5%	$95,000
$150,000	$7,500	5%	$142,500

All accounts: 5% max trailing drawdown

Real Scenario Walkthrough

$50K PRO account example:

Day 1 (Monday):

Starting balance: $50,000
Peak: $50,000
Violation threshold: $47,500
Trade: +$800
EOD balance: $50,800
New peak: $50,800
New violation threshold: $48,300

Day 2 (Tuesday):

Starting balance: $50,800
Peak: $50,800
Violation threshold: $48,300
Trade: -$1,200 (dropped to $49,600)
Intraday low: $49,000 (below threshold during session)
Recover: +$1,000
EOD balance: $50,600
Peak stays: $50,800
Violation threshold stays: $48,300
Status: No violation (EOD balance above $48,300)

Day 3 (Wednesday):

Starting balance: $50,600
Peak: $50,800
Violation threshold: $48,300
Trade: -$2,500 (balance now $48,100)
EOD balance: $48,100
Status: VIOLATION (below $48,300)
Account locked immediately after 5:00 PM ET close

Strategic Use of EOD Window

Advantage: Intraday recovery opportunity

You can be significantly underwater during the day and still avoid violation if you recover by 5:00 PM ET.

Example strategy:

10:00 AM: Long 2 ES, balance drops to $48,000 (below $48,300 threshold)

Instead of panicking:

Hold position or add hedges to recover by close.

4:30 PM: Position recovers, exit at $48,600

5:00 PM: Close at $48,600 (above $48,300 threshold)

Result: No violation

Without EOD rule (if intraday):

Would've violated at 10:00 AM when hit $48,000.

Tracking Your Drawdown Buffer

Formula:

Drawdown buffer = Current balance - Violation threshold

Example:

Peak: $52,000
Violation threshold: $49,500
Current balance: $51,200
Buffer: $51,200 - $49,500 = $1,700

You have $1,700 room before violation

Recommended buffer zones:

🟢 Green zone: $1,500+ buffer (trade normally)
🟡 Yellow zone: $700-1,500 buffer (reduce risk)
🔴 Red zone: <$700 buffer (stop trading or hedge)

What Happens at 5:00 PM ET Close

Market close sequence:

4:59:59 PM: Trading active
5:00:00 PM: CME futures markets close
5:00:00-5:01:00 PM: TakeProfitTrader system calculates EOD balance
5:01:00 PM: If balance < violation threshold → Account locked

Locked account means:

Cannot enter new trades
Open positions force-closed (if any)
Email sent: "Account violated Rule 3"
Must pay reset fee to continue

EOD Trailing Drawdown vs Starting Drawdown

Trailing drawdown (Rule 3):

Calculated from peak balance (which moves up with profits)

Example:

Start: $50,000
Make $5,000 profit → Peak: $55,000
Violation now at: $52,500 (not $47,500)

Starting drawdown (some other firms):

Calculated from original starting balance (never moves)

Example:

Start: $50,000
Make $5,000 profit → Balance $55,000
Violation still at: $47,500 (based on original $50K)

Which is harder?

Trailing drawdown is harder because the violation threshold moves up as you profit. You can't "bank" profits to give yourself more drawdown room.

How Withdrawals Affect EOD Drawdown

When you withdraw profits, peak resets downward.

Example:

Peak: $54,000
Violation threshold: $51,500

You withdraw $3,000:

Balance after withdrawal: $51,000
New peak: $51,000 (reset down to new balance)
New violation threshold: $48,500

Strategic benefit:

Withdrawing profits lowers your peak, giving you more drawdown room.

Before withdrawal:

Peak $54,000, threshold $51,500, current $51,000 = $500 buffer (danger)

After withdrawal:

Peak $51,000, threshold $48,500, current $51,000 = $2,500 buffer (safe)

For withdrawal strategy: https://proptradingvibes.com/blog/takeprofittrader-withdraw-pro-to-wallet

Common EOD Drawdown Violations

Violation Scenario #1: Holding losing position into close

4:00 PM: Down $2,000 on the day, balance $48,400 (threshold $48,300)
4:30 PM: Think "it'll recover"
5:00 PM: Close at $48,200 (still negative)
Result: Violation

Prevention: Set hard stop at threshold + $200 buffer ($48,500). Never hold into close if within $500 of violation.

Violation Scenario #2: Not tracking peak correctly

Mistake: Think peak is still $50,000 when it's actually $52,000
Reality: Threshold is $49,500 (not $47,500)
Close at: $49,000
Result: Violation (thought you had room, didn't)

Prevention: Check Control Center dashboard daily to verify current peak and threshold.

Violation Scenario #3: Weekend gap

Friday 4:00 PM: Close at $48,700 (threshold $48,300)
Monday 6:00 PM: Market gaps down, open at $48,100
Result: Violation on Monday EOD

Prevention: Don't hold positions over weekend if within $1,000 of threshold.

EOD Drawdown Risk Management

Strategy 1: Daily buffer check

Every morning, calculate:
Current balance - Threshold = Buffer

If buffer < $1,000: Trade smaller size that day

Strategy 2: Stop trading at threshold + $500

Set hard rule:
"If balance drops to within $500 of threshold, I stop trading for the day"

Strategy 3: Withdraw profits to reset peak

Every $2,000-3,000 profit, withdraw 60-80%.
This resets peak downward, giving you more drawdown room.

Strategy 4: Close all positions by 4:00 PM

Don't hold positions into close unless you have $1,000+ buffer.

For risk management: https://proptradingvibes.com/blog/takeprofittrader-risk-management

EOD Calculation Examples

Example 1: Single day large loss

Morning: Balance $52,000, Peak $52,000, Threshold $49,500
Trading: Lose $2,700 during day
4:00 PM: Balance $49,300 (below threshold)
4:45 PM: Make $500 back
5:00 PM: Close at $49,800 (above threshold)
Result: No violation

Example 2: Slow grind down

Week 1: Balance $51,000, Peak $52,000, Threshold $49,500
Week 2: Balance $50,200, Peak $52,000, Threshold $49,500
Week 3: Balance $49,600, Peak $52,000, Threshold $49,500
Week 4: Balance $49,400 (still above threshold)
Result: No violation yet, but danger zone

Bottom Line

TakeProfitTrader's Rule 3 enforces end-of-day trailing drawdown calculated at 5:00 PM ET market close, measuring maximum loss from account peak balance rather than starting capital—meaning a $50K account growing to $53,000 resets its violation threshold from $47,500 to $50,500, eliminating the $2,500 profit buffer.

EOD calculation differs from intraday drawdown by ignoring unrealized losses during trading sessions, allowing accounts to drop below violation thresholds temporarily as long as they recover above the limit by 5:00 PM ET close—providing strategic opportunity for intraday recovery that wouldn't exist under continuous monitoring.

The trailing mechanism makes peak balance a moving target that only increases with profits (never decreases except through withdrawals), creating a scenario where profitable traders face progressively tighter violation thresholds as their accounts grow unless they strategically withdraw funds to reset peaks downward.

Violation triggers immediate account lockout at market close requiring $449-1,499 reset fees, making buffer management critical with recommended zones: $1,500+ buffer (trade normally), $700-1,500 buffer (reduce risk), under $700 buffer (stop trading immediately).

Strategic withdrawal of 60-80% of profits every $2,000-3,000 gain resets peak balance downward and creates fresh drawdown room, while holding positions into 5:00 PM ET close requires minimum $500 buffer above violation threshold to account for last-minute adverse price movement or weekend gap risk.