Max drawdown rules vary, but they all define a floor the account cannot cross. The floor may be fixed from the original account size, or it may trail upward as the account grows.
Static max drawdown
A static rule keeps the floor in one place. A $100,000 account with a 10% max drawdown has a $90,000 floor. Monitoring is straightforward: track current equity and balance against that floor.
Trailing max drawdown
A trailing max drawdown can move upward as the account makes gains. This is more fragile because a profitable morning can reduce the future loss room. Traders should track both the current floor and the highest reference value that created it.
Equity matters
If the rule checks equity, floating losses can breach max drawdown before trades close. This is why a closed-trade statement is not enough. Pair max drawdown with equity curve tracking.
Max drawdown vs daily drawdown
Daily drawdown resets. Max drawdown usually does not reset in the same way. A trader can be safe for the day and still close to the account-level floor. Read daily drawdown rules explained for the other half of the model.
xTriel keeps drawdown state and remaining room visible across MT5 accounts.