Trailing drawdown is an important prop trading rule to understand before starting an account.

Unlike a fixed drawdown, the limit moves upwards as an account reaches new closed-balance highs. However, once it moves up, it does not move back down.

At Instant Funding, IF Micro Clarity and One-Phase Clarity both use a 6% Maximum Trailing Drawdown.

Which accounts use trailing drawdown?

Trailing drawdown applies to two accounts in the Clarity Range.

IF Micro Clarity is an instant funded account, while One-Phase Clarity requires traders to pass a one-phase evaluation before receiving a funded account.

Although the account structures are different, the 6% Maximum Trailing Drawdown works in the same way on both products.

How does trailing drawdown work?

The Maximum Trailing Drawdown is calculated as:

Highest closed balance – 6% of the starting balance

Only closed profitable trades cause the drawdown limit to move. Floating or unrealised profit from open positions does not affect it.

The limit follows the highest closed balance, never moves back down and stops trailing once it reaches the account’s original starting balance.

Trailing drawdown example

Imagine a trader starts with a $10,000 IF Micro Clarity or One-Phase Clarity account.

The 6% Maximum Trailing Drawdown is equal to $600, placing the initial limit at:

$10,000 − $600 = $9,400

If the trader closes profitable positions and the account balance reaches $10,500, the drawdown limit moves to:

$10,500 − $600 = $9,900

If the balance later decreases, the drawdown limit remains at $9,900. It does not move back down.

Floating profit will not move the limit either. The profit must be closed and added to the account balance before the trailing drawdown changes.

When does trailing drawdown stop?

The limit stops trailing once it reaches the original starting balance.

On a $10,000 account, this happens when the highest closed balance reaches $10,600:

$10,600 − $600 = $10,000

The drawdown limit then remains at $10,000, even if the account continues to generate closed profit.

Trailing drawdown vs fixed drawdown

A fixed drawdown remains at the same level throughout the account.

A trailing drawdown moves upwards when the account reaches a new highest closed balance. It continues following the balance until the drawdown limit reaches the account’s original starting balance.

The key takeaway

For IF Micro Clarity and One-Phase Clarity:

• The Maximum Trailing Drawdown is 6% of the starting balance.
• It follows the highest closed balance.
• Floating profit does not move it.
• It never moves back down.
• It stops at the original starting balance.
• Breaching the current limit results in an account breach.

Understanding how trailing drawdown works makes it easier to follow the account rules and track how the available drawdown changes as the balance grows.

Always review the latest account conditions before purchasing or trading an account.

Working for traders. Working with traders. That’s the Instant Funding Clarity Promise.