Understanding the trailing drawdown in Apex Trader Funding

Introduction to the Trailing Drawdown

In the world of prop trading, the trailing drawdown in Apex Trader Funding is a fundamental concept, especially for traders using platforms. It’s designed to protect the firm’s capital by ensuring traders manage risk effectively.

However, understanding how it works—and how it differs between evaluation accounts and funded accounts—is key to navigating prop trading successfully.

How the Trailing Drawdown Works in Apex Trader Funding

The trailing drawdown in Apex Trader Funding operates based on unrealized profits, meaning it adjusts as your account balance increases—even during an open trade. This makes it crucial to consider how large profits can pull your trailing drawdown closer, increasing the risk of breaching it.

Key Points to Remember:

1. In Evaluation Accounts:
   • The trailing drawdown never stops.
   • It continuously follows your highest balance as long as you remain in the evaluation phase.
2. In Funded Accounts:
   • The trailing drawdown stops trailing once it reaches your initial account balance + $100.
   • For example, on a $50,000 funded account, the trailing drawdown will stop moving once it locks at $50,100.

Example of the Trailing Drawdown in Action

Let’s use an example to clarify:

• Starting balance: $50,000
• Trailing drawdown: $2,500 (set at $47,500 initially)

Scenario 1:

• Profit: $1,000 (unrealized or closed, balance now $51,000).
• New trailing drawdown level: $48,500.

Scenario 2:

• Account drops: Balance falls to $49,500.
• Trailing drawdown stays locked at: $48,500 (as it follows the highest profit level).

In a funded account, once the trailing drawdown reaches $50,100, it stops adjusting further.

How the Trailing Drawdown in Apex Trader Funding Affects Your Strategy

Since the trailing drawdown follows unrealized profits, traders need to be extra cautious with large open positions. Here’s how it impacts different trading styles:

• Scalpers: Small, consistent profits work well, as large open trades might push the trailing drawdown closer.
• Day Traders: Focus on balanced trade sizes to avoid triggering the drawdown from unrealized spikes.

Pro Tips for Managing the Trailing Drawdown

1. Lock in Profits: If your trade moves significantly in your favor, consider taking partial profits to protect yourself from large unrealized drawdowns.
2. Avoid Over-Leverage: Stay within a reasonable risk-to-reward ratio to prevent sudden account drawdowns.
3. Monitor Your Metrics: Use Apex Trader Funding’s real-time metrics to keep an eye on your balance and drawdown level.

Why the Trailing Drawdown Is a Double-Edged Sword

The trailing drawdown forces discipline, making traders focus on risk management and consistent profits. However, it can feel restrictive—especially when it’s tied to unrealized gains.

While some traders prefer a static drawdown, the trailing version ensures only disciplined, profitable traders succeed. In Apex Trader Funding, this rule is part of what keeps it one of the leading prop firms in the industry.

Conclusion

The trailing drawdown is one of the most important rules in prop trading, especially in Apex Trader Funding. Whether you’re in the evaluation phase or funded, understanding its mechanics—like its connection to unrealized profits and when it stops trailing—will help you stay in the game longer.

And remember, if you’re ready to start trading with Apex Trader Funding, use the discount code: HAMZA at checkout to get the best deal on your trading account.

Good luck, and trade smart!