Short Answer
A Balance-based Trailing Maximum Loss moves up only when you close a trade in profit, following your highest closed Balance. An Equity-based Trailing Maximum Loss moves up in real time as your account Equity rises, including unrealized (floating) profit from open positions. The Equity-based model is stricter.
Balance vs. Equity
Balance is the value of your account from closed trades only. It changes when you close a position.
Equity is your Balance plus or minus the profit or loss of any open positions. It changes in real time as the market moves.
Balance-Based Trailing
With a Balance-based Trailing Maximum Loss, your Maximum Loss level rises only when you close a trade at a new highest Balance. Floating profit from open positions does not move it. This gives you room for an open trade to rise and fall without affecting your Maximum Loss level.
Equity-Based Trailing
With an Equity-based Trailing Maximum Loss, your Maximum Loss level rises as your Equity reaches new highs, including unrealized profit from open positions. Because it follows floating profit, the level can move up while a trade is open, then be breached if that floating profit falls back, even if you never closed the trade in profit.
This makes the Equity-based model stricter: it rewards locking in profit and penalizes letting winning trades reverse.
Example
A trader has a $10,000 account with a 10% Trailing Maximum Loss, starting the loss level at $9,000.
An open position pushes Equity to $10,800.
Balance-based: the loss level stays where it was until the trade is closed at a new high Balance. The open swing does not move it.
Equity-based: the loss level trails up with the floating profit toward $9,800. If the trade then reverses and Equity falls back below $9,800, the account breaches, even though the position was never closed in profit.
How Do I Know Which Applies?
Your program guide and your FundingRock Dashboard show whether your account uses a Balance-based or Equity-based Trailing Maximum Loss.
Important
Balance-based trailing follows closed Balance only; Equity-based trailing follows real-time Equity including floating profit.
The Equity-based model is stricter and can breach on a reversal of unrealized profit.
Check your program guide and Dashboard to confirm which model applies to your account.
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