Mechanics
High-water mark
Also searched: high water mark · peak balance · peak equity · trailing peak
The highest point your account has reached — the reference a trailing drawdown measures down from. As the high-water mark rises, the trailing floor rises with it.
Definition
A high-water mark is the highest balance (or equity) your account has ever hit. It's the anchor for a trailing drawdown: the max-loss floor sits a fixed amount below the high-water mark, so every new high raises the floor.
Which high-water mark applies depends on the trailing type. An intraday trail marks your highest live EQUITY, open profit included. An end-of-day trail marks your highest end-of-day BALANCE. A static line has no high-water mark at all — its floor never moves.
Why it fails evaluations
The high-water mark is where 'I was up, how did I breach?' comes from. Your peak set the floor; giving profit back drops you toward a line that's higher than where you started. The mark remembers your best moment even after the account forgets it.
Because the mark only ever rises, the room you have shrinks as you profit. Managing a trailing account means managing distance to the high-water floor, not distance to your starting balance.
Which verified firms trail a high-water mark
Live equity high-water mark (intraday)
6 firmsThe floor trails your highest live equity, open profit included.
End-of-day balance high-water mark
8 firmsThe floor trails your highest end-of-day closed balance.
No high-water mark (static)
5 firmsThe floor is fixed from day one — nothing trails a peak.
FAQ
What is a high-water mark in prop trading?
It's the highest balance or equity your account has reached — the reference point a trailing drawdown measures its max-loss floor down from. New highs raise the floor.
Does the high-water mark ever go down?
No. It only ratchets up on new highs and stays there, which is why a trailing floor tightens permanently as you profit.
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