Topstep: EOD Drawdown Explained

Topstep's End-of-Day (EOD) trailing drawdown rule creates a protective floor that only moves upward at market close, based on your settled daily balance. Unlike intraday trailing drawdown systems, your drawdown limit won't change during active trading hours, giving you more flexibility to manage positions without worrying about intraday equity swings.

Key Facts

Topstep's EOD trailing drawdown works by establishing a drawdown floor that only updates at the end of each trading day based on your closing balance. When you start trading, your initial drawdown limit is fixed - for example, if you have a $50,000 account with a $2,000 drawdown limit, your floor begins at $48,000. The key difference from intraday systems is that unrealized profits during the day won't move this floor higher until market close. If you end the day with a settled profit, your drawdown floor moves up by that amount, but intraday peaks are ignored.

Here's how this works with Topstep's account sizes: On a $50,000 account, assume your drawdown limit is $2,000. You start day one at $48,000 floor. If you make $500 and close the day at $50,500, your new floor becomes $48,500. On day two, even if you're up $1,000 intraday (account showing $51,500), your drawdown limit remains at $48,500 until market close. For a $100,000 account with a $3,000 drawdown limit, the same principle applies - you'd start with a $97,000 floor that only moves up based on end-of-day settled balances. The $150,000 account follows identical mechanics with proportionally scaled drawdown limits.

This rule particularly affects scalpers and day traders who see significant intraday swings. Since unrealized profits don't move the floor during trading hours, you have consistent risk parameters throughout the session. Swing traders benefit because overnight positions won't trigger drawdown violations based on temporary unrealized losses, as long as they stay above the previous day's established floor.

The most common mistake traders make is assuming their drawdown limit moves up with intraday profits. Many traders become overconfident after hitting significant unrealized gains early in the session, thinking their risk floor has moved higher. They then take larger positions or hold riskier trades, not realizing their actual drawdown limit hasn't budged from the previous day's close. This leads to unexpected violations when trades move against them. Another frequent error is not tracking the exact closing balance, since even small end-of-day profits will move the floor up incrementally. Successful traders at Topstep maintain disciplined position sizing based on their current established floor, regardless of intraday performance.