Static maximum drawdown is the simplest drawdown model used in crypto prop firm evaluations. The floor is set on day one and never moves. It does not trail your balance upward. It does not react to intraday price movements. It does not change as you profit. From the moment the account is activated to the moment it is closed, the drawdown floor is a fixed dollar value.
This article explains exactly how static drawdown works, how it compares to the trailing models used by most prop firms, and what it means for how you manage risk on a funded account.
Highlights of this article
- Static maximum drawdown means the floor is fixed at a set dollar level from day one and never changes.
- As the account grows, the gap between your current balance and the static floor increases. The model becomes more forgiving as you profit.
- Trailing drawdown models move the floor upward as your balance grows, keeping the buffer proportional to your equity.
- The Velotrade 1-Step Pro uses static drawdown at 3% of the initial balance. The floor is set at 97% of the starting value.
- Understanding which drawdown model applies to your account changes how you should size positions and manage risk.
What is maximum drawdown in a prop firm context?
In a prop firm evaluation, the maximum drawdown defines the furthest your account balance can fall from a reference point before the account is closed. Breach the maximum drawdown and the evaluation ends, regardless of where your profit-and-loss sits on any individual trade.
Every major crypto prop firm uses some version of maximum drawdown as a primary risk control. The difference between firms is in how the reference point is defined: is it fixed, or does it move?
There are three drawdown models in common use:
Static (fixed) maximum drawdown: The floor is a fixed dollar value calculated from the initial balance at account activation. It never changes.
EOD trailing maximum drawdown: The floor adjusts upward at the end of each trading day, based on the account's highest closing equity. It never moves intraday, and it only moves up, never down.
Tick-by-tick trailing maximum drawdown: The floor adjusts in real time, whenever the account equity reaches a new high, including on open unrealised positions. The most restrictive model for active traders.
For a detailed comparison of EOD trailing and tick-by-tick trailing, see EOD trailing vs tick-by-tick trailing drawdown explained.
How static maximum drawdown works
With a static drawdown, the math is simple. The firm sets a maximum loss threshold as a percentage of the initial account balance. That threshold becomes a fixed dollar floor. The floor does not change.
Example:
A $5,000 account with 3% static maximum drawdown has a floor set at:
$5,000 × (1 - 0.03) = $4,850
From day one to the final day of the evaluation, the breach threshold is $4,850. If the account equity falls to or below $4,850 at any point, the account is closed.
If the trader grows the account to $5,500 over two weeks of profitable trading, the floor is still $4,850. The drawdown buffer from the current balance is now $650, not $150. The static model becomes progressively more forgiving as the account grows.
This is the core characteristic of static drawdown: the absolute dollar gap between your current balance and the floor grows as you profit. The floor does not chase you.
How trailing drawdown differs
With EOD trailing drawdown, the floor moves upward each time your account closes at a new high. The buffer from your current balance stays roughly proportional.
Example using EOD trailing at 10%:
- Day 0: Balance $5,000. Floor set at $4,500 (10% below).
- Day 3: Account closes at $5,300. Floor rises to $4,770 (10% below $5,300).
- Day 7: Account closes at $5,600. Floor rises to $5,040.
- If the account then draws down to $5,050, it is within the floor. A further drawdown to $5,039 would breach it.
The trailing model keeps the floor proportional to your progress. A trader who has grown an account from $5,000 to $5,600 cannot give back more than 10% from that peak without breaching the floor.
The critical difference: a trader who grows a static-floor account from $5,000 to $5,600 can give back $750 before breaching the $4,850 floor. A trader on a 10% EOD trailing account in the same position can give back $560 before breaching the $5,040 trailing floor. The static model provides a larger absolute buffer after profitable trading.
Static drawdown and the daily loss limit
Maximum drawdown and the daily loss limit are two separate controls that operate simultaneously. Both must be respected at all times.
The daily loss limit defines the maximum you can lose in a single calendar day, measured from that day's opening balance. On the Velotrade 1-Step Pro, the daily loss limit is 3% of the initial account balance.
On a $5,000 Pro account: daily loss limit = $150.
The static maximum drawdown defines the absolute floor across the entire evaluation. On the Pro, that floor is $4,850.
Both rules apply at all times. A trader who has grown a Pro account to $5,800 still cannot lose more than $150 in a single day (the daily limit) and still cannot let the account fall below $4,850 (the static floor). The floor being $950 below the current balance does not change the daily loss limit.
The Velotrade 1-Step Pro: static drawdown in practice
The 1-Step Pro is Velotrade's implementation of the static drawdown model. The specifications:
| Parameter | Value |
|---|---|
| Account size | $5,000 |
| Challenge fee | $35 |
| Profit target | 10% ($500) |
| Daily loss limit | 3% ($150) |
| Maximum drawdown | 3% static |
| Drawdown floor | $4,850 (fixed at activation) |
| Profit split | Up to 90% |
The floor of $4,850 is set when the account is activated and does not change. Whether the account has been running for one day or six weeks, the breach threshold is $4,850.
For a full comparison between the Pro and the Classic 1-Step (which uses EOD trailing drawdown at 7%), see 1-Step Pro vs 1-Step Classic.
Why the static model suits certain trading styles
The static drawdown model is not universally easier or harder than trailing models. It is well-suited to specific trading styles and counterproductive for others.
Traders who benefit from static drawdown:
Precision risk managers. A trader who sizes every position to risk exactly 0.5–1% of the account per trade and applies consistent stop losses will rarely come close to the static floor in a single session. For this trader, the fixed floor is a background constraint that rarely becomes relevant, and the simplicity of a single fixed number reduces cognitive overhead.
Longer-hold traders. Traders who hold positions over multiple days benefit from the static floor's non-responsive nature. A position that runs up $300 in day one and partially retraces to $150 by day two does not move the floor. On an EOD trailing model, the strong day-one close would raise the floor, potentially tightening the buffer on day two. The static model does not punish the trader for a profitable day.
Traders focused on a single account. The static floor is simple to track: one number, known at account activation, never changes. Traders managing multiple accounts simultaneously find this simplicity reduces the likelihood of risk management errors.
Traders who are not suited to static drawdown:
High-volatility traders with wide intraday swings. A strategy that regularly sees 2–4% intraday drawdowns before recovering will bump against a 3% static floor frequently. The narrow absolute buffer at account open means early drawdowns create immediate pressure. A 7% EOD trailing model gives this trader more room.
Traders at the start of an evaluation. Before any profits have been accumulated, the static model provides the narrowest buffer. The trailing model offers 7% from the opening balance on the Classic 1-Step versus 3% on the Pro. If a strategy has a natural settling-in period with early drawdowns, the static model amplifies the risk of early account closure.
How to think about risk sizing on a static-floor account
Because the floor is fixed, position sizing on a static-floor account can be planned precisely from day one.
On the 1-Step Pro with a $4,850 floor and $5,000 starting balance:
- Maximum total loss: $150 from opening balance
- Daily loss limit: $150
These two numbers are identical at account open. A single day that reaches the daily limit also reaches the maximum drawdown. The margins are very tight at the start.
The correct approach for a Pro account is to size positions so that a full day's loss scenario does not exceed 2%–2.5% of the account, maintaining a buffer between your personal risk management and the hard rule. If you apply a personal daily loss limit of $100 (2% of $5,000), you have a $50 margin between your self-imposed limit and the account closure trigger.
As the account grows, this pressure eases. On an account that has grown to $5,300, the total buffer to the $4,850 floor is $450. The daily loss limit is still $150. A single bad day now uses only one-third of the total available buffer rather than all of it.
Static vs trailing: which is better for prop firm evaluations?
There is no universal answer. The better model depends on where you are in the evaluation and what your strategy does.
Static drawdown is better when:
- The account has grown above the starting balance. The static floor provides a larger absolute buffer than a trailing floor would at the same equity level.
- You want complete predictability. The floor never changes. There is no calculation required after day one.
- Your strategy produces steady, bounded daily P&L rather than large swings.
Trailing drawdown is better when:
- You are at the start of the evaluation. The 7% initial buffer on EOD trailing gives more room before a bad run closes the account.
- Your strategy has normal variance that can produce 3–5% intraday drawdowns before recovering.
- You want the floor to protect progressively as you grow rather than staying fixed at a low level.
For most beginners, EOD trailing drawdown is more forgiving at the evaluation stage because the wider initial buffer provides more room to learn and adjust. For experienced traders with tight, consistent strategies, the static model's simplicity and fixed floor can be preferable.
The bottom line
Static maximum drawdown means one thing: the breach threshold is fixed at account activation and does not change. On the Velotrade 1-Step Pro, that floor is $4,850 on a $5,000 account — calculated once, known in advance, and stable for the entire evaluation.
The trade-off is a narrow buffer at the start of the account. The advantage is that the buffer grows in absolute terms as the account profits, because the floor does not follow the balance upward.
Understanding which drawdown model your evaluation uses changes how you should size positions, set personal daily limits, and manage risk across sessions. The model is not a technicality. It is the primary structural constraint your entire risk management framework should be built around.
For a full explanation of how Velotrade's challenge rules work in practice, see crypto prop firm rules explained. For a detailed comparison of the 1-Step Pro and 1-Step Classic challenges, see 1-Step Pro vs 1-Step Classic. For a broader look at how to choose the right challenge for your trading style, see how to become a funded crypto trader. For a step-by-step breakdown of how funded account trading works, see crypto funded account trading explained.
Disclaimer: Challenge rules and drawdown structures are subject to change. Always verify current terms directly on the Velotrade challenges page before purchasing.
Frequently Asked Questions
About the author
Vittorio De Angelis
Executive Chairman
Former equity-derivatives trader at JP Morgan, Dresdner Kleinwort and Bank of America in London. Later Head of Brokerage at a global broker in Hong Kong.
View author page
