# What is trailing drawdown?

• The trailing drawdown will always follow the current balance, which is equal to your profit;
• The drawdown is recorded in real-time during the trading day and includes a commission;
• If the trader violates the allowable drawdown, the trader’s account is blocked by the administrator. In this case, the trader can make a reset or create a new account.

Trailing drawdown example:

Example #1: A trader has an account of \$120,000 it has a maximum trailing drawdown of -\$4,000. This means that the maximum you can lose is \$4,000 from the maximum profit point at any given time, including open positions. In this case, if your account drops to \$116,000, the account will be blocked.

``\$120,000 - \$4,000 = \$116,000``

Example #2: Let’s say, you started trading and the first trade you did is \$500 win. Now your balance is \$120,500. In this case, maximum drawdown also moves with your profits, and now the account minimum will be: \$116,500.

``\$120,500 - \$4,000 = \$116,500``

Example #3: Let’s say you have \$500 of unrealized profits locked in the trade, and you decided not to pick it up and wait for a bigger move. But after some time, the market goes against you, and you decide to take \$250 plus and close the trade. Now, your balance is \$120,250, but maximum drawdown is now at \$116,500, and here is why: The maximum drawdown will always move -\$4,000 from the highest account balance (including unrealized PnL).

``\$120,250 (Realized PnL) + 250\$ (Unrealized PnL) - \$4,000 = \$116,500``