The Trading Pit Drawdown Rules: Static (Prime) vs. Trailing (Classic) Explained

You're about to fund a Trading Pit account, and you need to understand: will your drawdown threshold move with your profits, or stay fixed forever?

Here's the critical difference: Prime accounts use static drawdown (your floor never moves—$93K on a $100K account stays $93K permanently), while Classic accounts use trailing drawdown (your floor moves up as you profit but never moves down). The exact trailing mechanism varies: CFD Classic trails on real-time equity (including open trades), Futures Prime/Stocks trail on end-of-day balance only, and Futures Classic trails on highest closed balance in real-time.

This isn't just a technical detail—it determines your entire risk management approach. Static drawdown gives you predictable, fixed risk. Trailing drawdown protects profits but can trap you if you don't understand when and how it moves. This article breaks down all four drawdown types with exact calculations, shows you how each one behaves during winning and losing streaks, and tells you which account type fits your trading psychology. As of December 2025, these are The Trading Pit's current drawdown rules.

Key Takeaways: Your Instant Drawdown Rules Answer

• CFD Prime = Static drawdown (7-10%) — your floor is set on Day 1 and never changes, even if you make $50K profit.
• CFD Classic = Trailing on Highest Equity (10%) — drawdown adjusts upward in real-time whenever your equity (including open P&L) hits a new high.
• Futures Prime = Trailing on EOD Balance (7%) — drawdown adjusts upward based on your closed balance at end-of-day only, not intraday peaks.
• Futures Classic = Trailing on Highest Balance (10%) — drawdown adjusts upward in real-time whenever your closed balance hits a new high.
• Stocks = Trailing on EOD Balance (5%) — same as Futures Prime, trails daily based on closed P&L at market close.
• Trailing stops at starting balance — on Futures Prime and Stocks, once your drawdown trails to match starting capital, it stops moving (prevents over-protection).
• Static is simpler, trailing is safer — static lets you calculate exact risk forever; trailing protects profits but requires constant monitoring.

In-Depth: The Four Drawdown Systems at The Trading Pit

CFD Prime: Static Max Drawdown (Never Moves)

Rule: Your maximum drawdown is fixed from Day 1 and never changes regardless of profits or losses.

Challenge phase:

• Max drawdown: 10% static
• $100K account example: $90,000 hard floor (never moves)

Funded phase:

• Max drawdown: 7% static
• $100K funded example: $93,000 hard floor (never moves)

How it works in practice:

Starting balance: $100,000
Static max drawdown: 7% = $7,000 loss limit
Hard floor: $93,000 forever

Day 10: You've made $15,000 profit → Current balance = $115,000
Drawdown threshold: Still $93,000 (hasn't moved)
Available risk: $22,000 ($115,000 - $93,000)

Day 30: You give back $10,000 → Current balance = $105,000
Drawdown threshold: Still $93,000 (hasn't moved)
Available risk: $12,000 ($105,000 - $93,000)

Day 60: You're back to breakeven → Current balance = $100,000
Drawdown threshold: Still $93,000 (hasn't moved)
Available risk: $7,000 (back to original risk)

The key insight: Your floor is permanently fixed. Whether you're up $50K or down $5K, you can always drop to $93,000 without breaching. This makes position sizing calculations simple—your max loss threshold never changes.

Psychology: Static drawdown rewards aggressive traders who want to push for big wins without worrying that their safety net gets tighter. You always have the same cushion.

CFD Classic: Trailing on Highest Equity (Real-Time, Includes Open Trades)

Rule: Your maximum drawdown adjusts upward every time your equity (current balance + unrealized P&L from open trades) hits a new all-time high.

Challenge phase:

• Max drawdown: 10% trailing on Highest Equity
• $100K account example: starts at $90,000, trails upward with equity peaks

Funded phase:

• Max drawdown: 7% trailing on Highest Equity
• $100K funded example: starts at $93,000, trails upward with equity peaks

How it works in practice:

Starting balance: $100,000
Trailing max drawdown: 10% = $10,000 below equity high-water mark
Initial floor: $90,000

Day 3: You open a long position, unrealized P&L = +$2,000 → Current equity = $102,000 (new high)
Drawdown threshold trails up: $92,000 (10% below $102,000)
You close the trade: Balance = $101,000 (closed $1K early)
Drawdown threshold: Stays at $92,000 (based on peak equity of $102,000, not close price)

Day 5: You open another trade, equity briefly hits $104,000 (new high)
Drawdown threshold trails up: $94,000 (10% below $104,000)
Available risk: Now only $10,000 from current equity to floor (assuming you're still at $104K)

Day 10: You give back profits, equity drops to $98,000
Drawdown threshold: Stays at $94,000 (never moves down)
Available risk: $4,000 ($98,000 - $94,000) — danger zone

The critical detail: Unrealized P&L counts. If you're holding a winner with +$5K unrealized profit, and that pushes your equity to a new high, your drawdown trails immediately—even before you close the trade.

The trap: Let's say you hold a swing trade overnight. Day 1 close: equity = $105K (new high), drawdown trails to $95K. Overnight, the trade gaps against you. Day 2 open: equity = $92K. You're breached because you fell below $95K.

Psychology: Trailing on equity protects profits aggressively but punishes traders who hold through volatility. Every new equity peak tightens your safety net.

Futures Prime: Trailing on EOD Balance (End-of-Day Only, Closed Trades)

Rule: Your maximum drawdown adjusts upward based on your closed balance at end-of-day only. Intraday peaks don't matter. Open trades don't matter. Only the balance snapshot at market close (5 PM ET for US futures).

Challenge phase:

• Max drawdown: 10% trailing on EOD Balance
• $100K account example: starts at $90,000, trails upward based on daily closes

Funded phase:

• Max drawdown: 7% trailing on EOD Balance
• $100K funded example: starts at $93,000, trails upward based on daily closes

Special rule: Trailing stops once drawdown reaches starting balance. If you grow a $100K account to $120K, your drawdown trails from $93K → $100K and then stops. You cannot breach once drawdown equals starting capital.

How it works in practice:

Starting balance: $100,000
Trailing max drawdown: 7% = $7,000 below EOD balance
Initial floor: $93,000

Day 1: Intraday you hit $108,000 balance (closed a huge winner), but you take another trade and end the day at $102,000 closed balance
Drawdown threshold trails up: $95,000 (7% below $102,000 EOD balance)
Note: The $108K peak doesn't matter—only EOD close matters

Day 2: You make $4K during the day → EOD balance = $106,000
Drawdown threshold trails up: $99,000 (7% below $106,000)
Available risk: $7,000 (still have full 7% buffer)

Day 3: You lose $6K → EOD balance = $100,000
Drawdown threshold: Stays at $99,000 (never moves down)
Available risk: $1,000 ($100,000 - $99,000) — critical danger zone

Day 4: You recover, make $10K → EOD balance = $110,000
Drawdown threshold: Moves to $100,000 and stops trailing permanently
Why it stops: Your drawdown has reached your starting balance ($100K). Per The Trading Pit's rule, trailing stops here.

Day 10: Your balance is now $150,000
Drawdown threshold: Still $100,000 (stopped trailing at starting balance)
Available risk: $50,000 (massive buffer)

The advantage: Once you double your account, you literally cannot breach anymore (you'd need to lose back to starting balance, which is now your floor). This rewards consistent growth.

Psychology: EOD trailing is the middle ground. You're protected from giving back daily gains, but intraday volatility won't tighten your drawdown. Swing traders and multi-day position holders love this structure.

Futures Classic: Trailing on Highest Balance (Real-Time, Closed Trades Only)

Rule: Your maximum drawdown adjusts upward in real-time every time your closed balance (not equity, not open P&L—just realized balance from closed trades) hits a new high.

Challenge phase:

• Max drawdown: 10% trailing on Highest Balance
• $100K account example: starts at $90,000, trails upward with closed balance peaks

Funded phase:

• Max drawdown: 7% trailing on Highest Balance
• $100K funded example: starts at $93,000, trails upward with closed balance peaks

How it works in practice:

Starting balance: $100,000
Trailing max drawdown: 10% = $10,000 below highest closed balance
Initial floor: $90,000

Day 3: You close trades, balance peaks at $102,000 (new high)
Drawdown threshold trails up: $92,000 (10% below $102,000)

Later that day: You open a new trade with +$5K unrealized profit → Equity = $107,000
Drawdown threshold: Stays at $92,000 (open P&L doesn't move trailing drawdown)

You close that trade: Balance = $107,000 (new high)
Drawdown threshold trails up: $97,000 (10% below $107,000)

Day 5: You take losses, balance drops to $100,000
Drawdown threshold: Stays at $97,000 (never moves down)
Available risk: $3,000 ($100,000 - $97,000)

The key difference from CFD Classic: Open trades don't trigger trailing. Only when you close and realize profit does your drawdown adjust.

The advantage over CFD Classic: You can hold volatile swing trades without worrying that unrealized profit will trail your drawdown before you close. You control when the trailing happens by choosing when to close winners.

Psychology: This is for disciplined traders who want profit protection but don't want to be penalized for holding winners through volatility.

Stocks: Trailing on EOD Balance (Same as Futures Prime)

Rule: Identical to Futures Prime. Drawdown trails based on end-of-day closed balance only. Trailing stops when drawdown reaches starting balance.

Challenge phase:

• Max drawdown: $1,250 on $25K account (5%) trailing on EOD Balance
• Starting floor: $23,750

Funded phase:

• Max drawdown: 5% trailing on EOD Balance

Example ($25K account):

Starting balance: $25,000
Initial floor: $23,750

Day 1: EOD balance = $25,500 → Floor trails to $24,250
Day 2: EOD balance = $26,000 → Floor trails to $24,750
Day 4: EOD balance = $26,500 → Floor trails to $25,250
Day 10: EOD balance = $27,500 → Floor trails to $25,000 and stops permanently

From Day 10 forward, your drawdown is locked at your starting balance ($25K). You can grow to $50K and still only risk back to $25K.

The Critical Comparison: All Drawdown Types Side-by-Side

When Each Drawdown Moves: Real-Time vs. EOD

Why This Matters for Your Trading: Strategic Position Sizing by Drawdown Type

If You Have Static Drawdown (CFD Prime)

Your advantage: Predictable, never-changing risk.

Position sizing strategy:

Your max loss is always $7,000 (on a $100K funded account). Use this for every trade:

Max position size = Max Loss ÷ (Stop Distance × $ Per Point)

Example: Trading EUR/USD on a $100K CFD Prime funded account

• Max loss: $7,000
• Stop distance: 50 pips
• $ per pip (standard lot): $10

Max position size = $7,000 ÷ (50 × $10) = 14 standard lots max

But realistically: Risk 1-2% per trade, not full 7%. Reserve the 7% buffer for drawdown from multiple losing trades.

Risk per trade: 1% = $1,000 per trade
Position size: $1,000 ÷ (50 pips × $10) = 2 standard lots

The mental advantage: You can calculate your position size on Day 1 and never adjust it. Your floor doesn't move, so your risk parameters don't change.

If You Have Trailing Drawdown (All Classic + Futures Prime + Stocks)

Your challenge: Your available risk shrinks as you profit.

Dynamic position sizing required:

You cannot use fixed position sizing because your drawdown buffer changes constantly.

Daily calculation routine:

1. Check your current balance/equity
2. Check your current drawdown threshold (visible on dashboard)
3. Calculate available buffer: Current Balance - Drawdown Threshold
4. Never risk more than 10-20% of available buffer on a single trade

Example (Futures Prime, $100K funded, 7% trailing):

Day 1:

• Balance: $100,000
• Drawdown threshold: $93,000
• Available buffer: $7,000
• Max risk per trade: $700-1,400 (10-20% of buffer)

Day 30:

• Balance: $115,000 (you're up $15K)
• Drawdown threshold: $101,000 (trailed up based on EOD closes)
• Available buffer: $14,000
• Max risk per trade: $1,400-2,800 (10-20% of buffer)

Notice: Your risk per trade doubled because your buffer doubled. But if you give back $10K:

Day 45:

• Balance: $105,000
• Drawdown threshold: Still $101,000 (never moves down)
• Available buffer: $4,000
• Max risk per trade: $400-800 (10-20% of buffer)

You're dangerously close to breach. At this point, stop trading or reduce position size drastically.

The "Trailing Trap" and How to Avoid It

The trap: You make $20K profit over 2 weeks. Your drawdown trails from $93K to $107K. You start trading larger (because you have more capital). You hit a losing streak and give back $15K. Now your balance is $105K but your drawdown is $107K. You're breached.

How this happens:

Traders increase position size as their account grows, but they forget their drawdown is trailing behind them. When they lose, they don't have the original 7% buffer—they only have the tiny gap between current balance and trailing drawdown.

Prevention strategy:

1. Never increase position size just because your balance grew. Your actual risk buffer (balance minus trailing DD) might be smaller than when you started.
2. Check your dashboard every morning. Know your exact drawdown threshold before placing any trade.
3. Set alerts at 80% of buffer. If you're within $2K of your drawdown (on a $10K buffer), stop trading that day.
4. After big wins, take profits off the table. Request a payout. This resets your psychological approach and prevents giving back gains.

Special Strategy for Futures Prime and Stocks: The "Safe Zone" After Doubling

The golden rule: Once your trailing drawdown reaches your starting balance, you cannot breach anymore (unless you lose back to starting capital).

Aggressive growth strategy:

Phase 1 (Balance: $100K-$120K):

• Trade conservatively
• Risk 1% per trade
• Focus on hitting the "safe zone" ($120K+)

Phase 2 (Balance: $120K+, Drawdown locked at $100K):

• Your floor is now your starting balance
• You have $20K+ buffer that keeps growing
• Increase position size to 1.5-2% per trade
• Trade more aggressively (you have massive cushion)

Example:

Balance: $150,000
Drawdown: $100,000 (stopped trailing)
Buffer: $50,000

You'd need to lose $50K to breach. That's a 33% drawdown from current balance. Almost impossible if you're using proper risk management.

This is where compounding accelerates. You can take bigger swings because your downside is protected by the massive buffer.

Frequently Asked Questions (FAQ)

Q: If I make $10K profit and then lose $8K, does my trailing drawdown move back down?

A: No. Trailing drawdown only moves upward, never downward. Once it trails to a higher level, it stays there permanently even if you give back profits. This protects you from giving back all gains, but it also means you can get trapped close to your drawdown if you're not careful.

Q: On CFD Classic, if I have an open trade with +$5K unrealized profit but haven't closed it, does my drawdown trail?

A: Yes. CFD Classic trails on "Highest Equity," which includes unrealized P&L from open trades. The moment your equity (balance + open P&L) hits a new high, your drawdown adjusts upward—even before you close the trade.

Q: On Futures Prime, what time is "end-of-day" for trailing calculations?

A: 5 PM ET (US futures market close). Your closed balance at that snapshot is what determines if your trailing drawdown adjusts. Intraday peaks don't matter.

Q: Can I see my current drawdown threshold in real-time on the dashboard?

A: Yes. The Trading Pit dashboard displays your current drawdown limit in real-time. Check it before every trading session, especially if you're on a trailing drawdown account.

Q: Which drawdown type is easier for beginners?

A: Static drawdown (CFD Prime). Your risk is fixed and predictable. You don't need to recalculate position size or worry about trailing mechanics. Once you master trading with static drawdown, you can move to trailing systems if you want profit protection.

Q: If my Futures Prime drawdown stops trailing at $100K (starting balance), and I grow to $200K, can I lose back to $100K without breaching?

A: Correct. Once trailing stops at starting balance, that becomes your permanent floor. You'd need to lose all the way back to $100K to breach, which gives you enormous flexibility to trade aggressively with the profits above starting capital.

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