A static drawdown is a form of maximum drawdown that stays fixed against the account’s starting balance regardless of profits earned. If a trader starts with a $100,000 account and a $5,000 maximum drawdown, the breach point is $95,000 for the life of the account, whether the account grows to $110,000 or $200,000. Static drawdown is one of the two main drawdown structures used across prop firm plans, the other being trailing drawdown.

The static structure calculates the drawdown limit once, at the start of the account, and does not adjust it as the trader accumulates profits. A trader on a $100,000 account with a $5,000 static drawdown who grows the account to $130,000 still has $95,000 as the breach point, giving them $35,000 of loss tolerance from the current balance. This tolerance expands as the account grows, which is why static drawdown is generally considered easier to trade under than trailing drawdown.

Static drawdown gives traders room to absorb losing streaks without the risk tightening as their profits build. A trader who has a strong first month on the account can enter subsequent months with significantly more buffer than a trailing structure would provide at the same point.