What is an intraday trailing drawdown, and why does open profit raise your floor?

An intraday trailing drawdown is a loss limit whose floor follows your highest balance in real time, including profit on trades that are still open. The floor sits a fixed amount below that peak and never moves down. So a winner that runs and then fades raises your floor on the way up, and the floor stays there even if you close the trade green.

This post goes deep on that one rule: how one trade moves the floor step by step, and what it does to your room. For the three drawdown types side by side, start with What is a trailing drawdown?.

The rule in one line

Floor = highest balance so far, open trades included − drawdown. It updates whenever the balance makes a new high, at any moment in the session.

The phrase that matters is "open trades included". The floor does not wait for you to bank anything.

One trade, step by step

(example figures, not results)

The shared example from the main post: a $50,000 account with a $2,000 intraday trailing drawdown, starting the day at its high, no lock reached. One trade runs to +$1,200 at its best and closes at +$700.

The arithmetic at the close:

• Floor = $51,200 − $2,000 = $49,200
• Room = $50,700 − $49,200 = $1,500

The trade made $700. The floor moved up $1,200. Room fell from $2,000 to $1,500, a loss of $500 of room on a winning trade.

Notice the room column while the trade ran: it stayed at $2,000 all the way up. While the floor is trailing, room never goes above the drawdown. It falls by exactly what you give back from the best point, and it only comes back if the balance climbs back to that point.

The one formula to keep

Room = drawdown − (peak − current balance).

The part in brackets is your giveback: how far you are below your best moment, open trades included. Before any lock:

• At a new high, room is the full $2,000.
• Every dollar below the peak is a dollar of room gone, whether it came from a losing trade or from a winner that faded.

So on an intraday trailing account, a $500 giveback from an open winner and a $500 losing trade cost exactly the same room. That is the part most traders do not feel in the moment, because one of them closed green.

Same trade, three rules

(example figures, not results)

The same trade, +$1,200 at best and +$700 at the close, under each type:

The end-of-day version only counts the close, so the $51,200 peak never reached its floor. The full mechanics of that rule are in What does end-of-day drawdown mean?.

Your real stop moves while the trade is open

Here is where the rule catches people mid-trade. Say the trade above was opened with a stop that risked $1,800, inside the morning's $2,000 of room.

At the best point the balance is $51,200 and the floor is $49,200. The account now fails when the balance falls $2,000 from the peak, which is a trade P&L of +$1,200 − $2,000 = −$800. The stop order still sits at −$1,800, but the floor sits at −$800. If price falls back, the account fails long before the stop fills.

Once a trade takes the account to a new high, the account fails $2,000 below that high, whatever the order on the chart says. If your stop is further away than that, the floor is your real stop.

What a smaller room does to the next trade

Room is what you size from. Take a 40-tick stop on 10 MNQ. CME Group contract specifications (checked 2026-10-06) put MNQ at $0.50 a tick, so one stop costs 40 × $0.50 × 10 = $200.

• Before the trade, room $2,000: $2,000 ÷ $200 = 10 full stops
• After the trade, room $1,500: $1,500 ÷ $200 = 7.5, so 7 full stops

The account is up $700 and can take 3 fewer full stops. Sizing from the account balance would miss this completely. How many contracts should I trade on a prop firm account? walks through sizing from room.

Planning around open profit

None of this tells you where to exit. It does tell you what each exit costs, so you can decide in advance.

• Treat giveback as a cost. Before you enter, decide the most you will let a winner give back from its best point. On this rule, once you exit, that amount stays out of your room until the balance climbs back to the peak. A trade that peaks at +$1,200 and exits at +$1,000 gives back $200, leaving room of $1,800. Exiting at +$700 leaves $1,500.
• Check the floor during the trade, not only before the open. The morning number goes stale the moment an open trade makes a new high.
• Know how your firm marks open profit. Whether the peak uses the last traded price or the price you could exit at is a rulebook detail, and it can put the real floor slightly away from your own arithmetic. If the rulebook does not say, ask.
• Know whether there is a lock. Some plans stop trailing once the floor reaches a set level, often the starting balance. On the shared example that happens when the peak, open profit included, first reaches $52,000. Not every plan has one.

Common mistakes

• Judging a trade by its close. On this rule the cost of a trade to your room is its giveback from the best point, not its result. The example closed +$700 and cost $500 of room.
• Leaving the morning's stop logic in place. After a run, the floor can sit closer than your stop. The account fails at the floor.
• Using this morning's room. Every new peak, open trades included, changes the floor. Recompute after any trade that made a new high.
• Thinking profit builds a cushion. Until a lock, room is never more than the drawdown. New highs raise the floor dollar for dollar.
• Assuming the lock exists. Plans differ. Do not plan a trade around a lock you have not read in the rules.