Home › Market News › The One Rule That Should Decide Your Prop Firm
If you’ve traded with a prop firm before, you might know the feeling: you’re having a great day, trades are lining up, you’re in the zone… and then one pull back wipes out your account. Not because your trading strategy failed. Not because you broke your own rules. But because of a prop firm rule that has nothing to do with real trading.
That’s exactly why you should forget chasing the cheapest price, biggest account size, or flashy “pass in one day” offers. None of that matters if the rules make it nearly impossible to take home a payout. And we believe no rule ruins more accounts than Intraday Trailing Drawdown.
It’s a big reason traders fail evaluations or lose funded trader accounts, and it should be the first thing you check when choosing a prop firm.
In trading, your funded account balance doesn’t move in a straight line: it rises, it falls, it recovers. The drop from your highest point before bouncing back is called a drawdown.
For example, if your prop trading account peaks at $105K and then dips to $103K before climbing again, you’ve had a $2K drawdown.
And when you trade with a prop firm, the amount you can lose before losing your account (maximum loss limit) is tied to one of two drawdown rules.
Imagine playing basketball, and the ref blows the whistle the moment you fall behind, and doesn’t let you finish the game (no comeback, no chance to finish strong). That’s what trading with Intraday Trailing Drawdown feels like.
With Intraday Trailing Drawdown, firms are allowed to fail you even though you’re up in your trade. That means your maximum loss limit trails your highest unrealized profit of the day. Dip below it—even for a second—and your account is closed.
End-of-Day Drawdown allows you to play all four quarters. This is how real trading works. You can ride out the ups, downs, and pullbacks as long as you finish the day above your max drawdown limit.
Let’s say you’re up $5K in a trade and it pulls back $2K, and you finish the day up $3K.
Same trade. Same plan. Different Trading Experience. One rule lets you win. The other takes you out.
While prop firms like Topstep measure your drawdown at the end of the trading day, other firms don’t, and that difference can be the line between growing as a trader and getting stopped cold.
A normal pullback doesn’t just sting. It ends your account on the spot. And that hits harder than you think.
Your confidence takes a shot, you start cutting winners too early, and you pass on setups you’d normally take because you’re worried about a dip. Pretty soon, you’re not trading your plan. You’re trading scared. And that’s a fast track to bad habits and missed opportunities.
The worst part… This rule does nothing to teach you about real trading. Live markets don’t bench you for a quick pullback, but a firm with intraday trailing will. So, what does a better rulebook look like at a prop firm that supports your growth as a trader?
Let’s be real: You’re at a prop firm to make money. If the rules set you up to fail, you’re never taking a payout. And you can’t win if you’re always stuck playing defense.
Topstep uses End-of-Day Drawdown, so you’ve got room to shake off a pullback, stick to your plan, and trade like you would in the real markets. It’s built to help you stay consistent, sharpen your skills, and actually grow as a trader. Bottom line: Pick a firm with rules that work for you, and you’ll be a whole lot closer to cashing a payout.
That’s why the rules are everything when you’re picking a prop firm. Look past the flashy offers and ask yourself one question: Do their rules give you a fair shot at a payout? If the answer’s no, it doesn’t matter how big the account or how cheap the sign-up, it’s not worth your time.
If you want to see how Topstep stacks up against other prop firms, check out our full breakdown: Topstep vs. Other Prop Firms.
The best prop firms use rules to help traders build better habits. The worst prop firms set traps that send you back to square one.
Before you commit your time and money, look closely at the drawdown rule. If it’s there to make you a better trader, you’re in good hands. If it’s there to catch you on a normal pullback, run like your payout depends on it (because it does).
The real test in trading isn’t avoiding every tiny stumble. It’s finishing strong and doing it again tomorrow. And with the right rules on your side, you give yourself the chance to do exactly that.
Start your journey with Topstep’s Trading Combine and prove your skills in a fair environment designed to help traders grow and get funded
A drawdown is the drop in your account balance from its highest point before it recovers. It shows how much your account has declined during a pullback.
Intraday Trailing Drawdown is a prop firm rule where your maximum loss limit trails your highest unrealized profit of the day. Even if you’re up on a trade, a quick pullback can close your account.
With End-of-Day Drawdown, your loss limit is only measured at the end of the trading day. You can ride out pullbacks and still finish positive, giving you a fair shot at payouts.
They often punish normal market pullbacks, causing accounts to be closed too early. This leads to frustration, bad habits like cutting winners short, and prevents traders from growing.
Topstep uses End-of-Day Drawdown, which mirrors real market conditions. Traders can manage pullbacks, stick to their strategies, and stay funded long enough to earn real payouts.
Always check how the firm measures drawdowns. The difference between Intraday Trailing Drawdown and End-of-Day Drawdown can determine whether you actually take home payouts.
