If you only master one funded-account rule, make it this one. Drawdown is the loss limit that, when hit, ends your account. But two firms can advertise the same number and behave completely differently — because of how the drawdown is measured.
Trailing drawdown
A trailing drawdown follows your account’s highest point. Every new equity peak drags the loss limit up with it — and it never falls back down. The upside: your buffer grows as you profit. The trap: it tightens behind you, so giving back a big open profit can breach you even though you’re still “up” on the day.
End-of-day drawdown
An end-of-day (EOD) drawdown only re-locks at the session close, not on every intraday tick. That gives you room to let a trade work intraday without the floor chasing your every high. Many traders find EOD calmer to manage.
Why it changes how you trade
Under a trailing rule, banking profit and protecting open gains matters more — a giveback can end you. Under EOD, intraday swings matter less; the close is what counts. Same target, different game.
How I manage it
I always know exactly where my floor sits right now, and I trade further from it than feels necessary. The drawdown should never surprise me — if it does, I wasn’t managing the account, I was hoping.