Short Answer
A Trailing Maximum Loss moves up as your account reaches new highs, and never moves down. Depending on your Evaluation Program, it follows either your highest Balance or your highest Equity.
Once the Trailing Maximum Loss reaches your initial account balance, it locks permanently and no longer trails upwards.
How It Works
Your Trailing Maximum Loss starts below your initial account balance based on your Evaluation Program’s Maximum Loss amount.
As your account reaches a new high, your Maximum Loss Limit moves up by the same amount. Depending on your program, the “new high” is measured either by your Balance (closed trades only) or by your Equity (including unrealized profit from open positions).
If your account value decreases, your Maximum Loss Limit does not move down.
Once your Maximum Loss Limit reaches your initial account balance, it locks permanently.
The example below uses a Balance-based Trailing Maximum Loss. For how an Equity-based Trailing Maximum Loss differs, see What is the difference between Balance-based and Equity-based trailing?
Example (Balance-based)
A trader starts with a $50,000 account with a 6% Balance-based Trailing Maximum Loss.
Initial Maximum Loss floor: $47,000
Account Balance increases to $51,000
Maximum Loss floor moves to $48,000
Account Balance later drops to $50,500
The Maximum Loss floor remains at $48,000 because a Trailing Maximum Loss never moves down.
Once the Maximum Loss floor reaches $50,000, it locks permanently and will no longer move higher.
Important
A Trailing Maximum Loss follows your highest Balance or highest Equity, depending on your Evaluation Program.
It only moves upward and never moves downward.
Once it reaches your initial account balance, it locks permanently.
Check your program guide and Dashboard to confirm which model applies to your account.
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