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What Is EOD Drawdown

An EOD drawdown, or end of day drawdown, is a rule that measures an account’s trailing or static drawdown based on the account balance at the close of each trading day, rather than in real time. This rule is typically used in place of or alongside traditional real-time trailing drawdowns. With EOD drawdown, the risk limit only updates once per day based on the balance at the end of the session, providing a more forgiving structure for intraday fluctuations. It is commonly used in funded accounts but may also appear in select evaluation plans.

How It Functions

In accounts with an EOD drawdown, the drawdown does not trail upward during the trading day as equity increases. Instead, it remains fixed until the market closes, at which point it recalculates based on the new end-of-day balance. This means that a trader can grow their account intraday without moving the drawdown higher, as long as they close the day below a new high balance. If the trader ends the day with a higher balance than before, the drawdown level will trail upward accordingly, preserving a set distance below the new closing balance.

For example, if a trader starts the day with an account balance of $52,000 and the trailing drawdown is $49,500, that level will not move even if the account reaches $54,000 during the session. However, if the trader closes the day at $53,000, the drawdown will then move up to $50,500 based on the firm’s drawdown distance. All intraday fluctuations are ignored when calculating new drawdown levels. This gives traders more flexibility to manage trades and withstand normal volatility during the day without risk of triggering a violation.

Benefits and Strategic Implications

The EOD drawdown structure is often seen as more favorable to traders, especially those who hold through intraday swings or use scaling strategies. Since the drawdown only updates once per day, traders can allow their positions to develop without being penalized for short-term losses or unrealized drawdowns. This is especially beneficial for strategies that rely on temporary pullbacks or multiple entries before full recovery.

However, it is important to note that the drawdown still functions as a hard breach rule. If a trader’s real-time account balance or equity drops below the current drawdown level, even during the trading day, the account may be disqualified. The EOD structure only refers to how the drawdown is recalculated, not how it is enforced intraday. Once the drawdown level is set at the end of the previous session, it remains the active risk floor for the next day’s trading.

EOD vs Live Trailing Drawdown

The main difference between EOD and live trailing drawdown is the timing of the updates. With live trailing drawdown, the risk limit follows the highest point of intraday equity continuously, increasing every time the account reaches a new high. In contrast, an EOD drawdown only moves at the close of the trading session, giving traders more margin for fluctuations during the day. While both rules serve to protect the firm’s capital, EOD drawdowns allow for more strategic flexibility and are often paired with stricter overall drawdown distances to maintain balance.

Summary

An EOD drawdown is a trailing or static drawdown rule that only updates at the end of each trading day, based on the closing balance. It does not move during intraday gains and offers greater flexibility for managing trades through volatility. However, the current drawdown level remains a hard breach point throughout the day, and traders must avoid letting their balance fall below it at any time. Understanding the EOD drawdown structure is key to planning intraday strategy and managing risk while taking advantage of daily profit opportunities.