Understanding equity-based static drawdown
Why "non-trailing" drawdown actually works in your favor, with a breakdown of how the limits are calculated in real time.
Drawdown rules look intimidating until you understand what makes them tick. The phrase "equity-based, static, non-trailing" is doing a lot of work. Here's what each piece actually means.
Equity, not balance
The most important word in the rule is equity. Your balance is what's settled — it only changes when positions close. Your equity is what your account would be worth if every open position closed at the current market price.
If your balance is $25,000 and you have an open BTC long that's down $400, your equity is $24,600 right now. The drawdown rule applies to that $24,600 number — not the $25,000 balance.
This matters because it changes how you size positions. A "small" loss in balance terms can be a big loss in equity terms if you're holding through volatility. Always check your equity drawdown floor before adding to a position.
Static, not trailing
"Trailing" drawdown is a rule where your maximum loss floor moves up as your equity grows. If you start at $100K and reach $108K, a trailing 8% drawdown would put your new floor at roughly $99K — even though you're up.
Coinhub Funded uses static drawdown. The maximum drawdown floor is set on day one and never moves. On a 2-Step funded $100K account, the 10% max drawdown means a $90,000 floor — forever, regardless of how high your equity climbs.
| Scenario | Trailing drawdown | Static (Coinhub) |
|---|---|---|
| Start at $100K, max DD 10% | $90,000 floor | $90,000 floor |
| Reach $110K equity | $99,000 floor | $90,000 floor |
| Reach $130K equity | $117,000 floor | $90,000 floor |
The implication is meaningful: as you grow your account, your effective risk buffer also grows. At $130K equity with a $90K static floor, you have $40K of cushion to navigate a drawdown. Under a trailing rule, you'd have less than half that.
This is one of the most trader-friendly choices in our rule set, and it's worth understanding.
Daily drawdown: the reset
Daily drawdown works differently from maximum drawdown. It resets at 00:00 UTC every day, and the new floor is calculated based on your closing equity from the previous day.
Concretely: if you start a day at $100,000 equity, your daily DD limit (let's say 4%) means you cannot drop below $96,000 during the trading day. If you end the day at $102,000, tomorrow's floor becomes $97,920 (4% below $102K). If you end at $98,000, tomorrow's floor becomes $94,080.
The reset matters for swing traders. A position you hold overnight is judged against tomorrow's reset floor, not today's. But intraday position management still has to respect today's floor until 00:00 UTC.
How to size positions around drawdown
The standard approach: calculate the distance from your current equity to your nearest drawdown floor (whichever of daily or max is closer). Divide that by 2 to 3. That's your risk budget for the next trade.
Example on a 2-Step Pro funded $50K account:
- Current equity: $52,500
- Today's daily DD floor (5% from start of day at $51,800): $49,210
- Distance to floor: $3,290
- Risk budget per trade: ~$1,100 (one-third of remaining)
This approach gives you room to be wrong 2-3 times in a session without triggering a rule. It also forces you to size down when you're close to a floor, which is exactly what you should be doing anyway.
- Equity = balance + floating P&L on open positions
- Static = max DD floor never moves up as you profit
- Daily DD = resets at 00:00 UTC against prior day close
- Max DD = lifetime floor at fixed % below initial balance
- Funded 2-Step: 5% daily / 10% max · Funded 1-Step: 3% daily / 7% max
