If there's one rule that causes the most confusion (and the most resets), it's this one. The trailing threshold isn't complicated once you understand it, but it works differently than most people expect. Let's break it down properly.
What is the trailing threshold?
Think of the trailing threshold as a floor that follows you up but never comes back down. It's the minimum balance your account must stay above at all times. The moment your balance touches or drops below this floor, your evaluation ends.
The threshold starts $2,500 below your initial balance (for a $50K account). So on day one, you have $2,500 of breathing room. Simple enough.
Here's where it gets interesting: the threshold follows your highest balance in real-time. Not your closing balance. Not your average balance. Your highest balance at any point—even if you only touched it for a few seconds during the day.
The Formula
Threshold = Highest Balance Ever − $2,500
This is the part most people miss: If your balance spikes to $54,000 during a trade and then you close the trade at $51,000, your threshold already moved up based on that $54,000 peak. It doesn't matter that you didn't "keep" the profits. The threshold saw the high and it's not coming back down.
Let me show you what I mean
Numbers on a page don't always click. Let's walk through some real scenarios so you can see exactly how this plays out.
Scenario 1: A clean, steady pass
This is what a healthy evaluation looks like. The trader makes consistent progress without any wild swings. Notice how the threshold (red dashed line) only moves up when there's a new high, and stays flat during pullbacks.
BalanceThresholdProfit Target
Steady progress over 7 daysPassed
$56K$54K$52K$50K$48KDay 1Day 2Day 3Day 4Day 5Day 6Day 7$53K
Day | High Balance | Threshold | Buffer | What happened |
1 | $50,000 | $47,500 | $2,500 | Starting point |
2 | $51,000 | $48,500 | $2,500 | New high → threshold moves up |
3 | $51,000 | $48,500 | $2,000 | Balance at $50,500, no new high |
4 | $52,000 | $49,500 | $2,500 | New high → threshold moves up |
5 | $52,000 | $49,500 | $2,000 | Balance at $51,500, no new high |
6 | $53,000 | $50,500 | $2,500 | Target reached! Threshold locks |
7 | $55,000 | $50,500 | $4,500 | Threshold stays locked |
See how on Day 3 and Day 5, the balance dropped a bit but the threshold didn't move? That's the key insight: the threshold only cares about new highs. Pullbacks don't affect it (as long as you stay above it).
Once you hit the profit target ($53,000), the threshold stops trailing forever. That's why Day 7 shows a bigger buffer—the trader kept making money but the threshold stayed at $50,500. This is your finish line. Get there and you're safe.
Scenario 2: The "big win" trap
This is the scenario that catches most traders. You have an amazing day, you're feeling confident, and then everything falls apart. Let me show you exactly how this happens.
Big win followed by violationViolated
$56K$54K$52K$50K$48KDay 1Day 2Day 3Day 4Day 5$55,500 peak
Day | High Balance | Threshold | Buffer | What happened |
1 | $50,000 | $47,500 | $2,500 | Starting point |
2 | $55,500 | $53,000 | $2,500 | Huge day! But threshold jumped $5,500 |
3 | $55,500 | $53,000 | $0 | Closed at $53K. Zero buffer left. |
4 | $55,500 | $53,000 | -$1,000 | Balance at $52K. Already in violation. |
5 | $55,500 | $53,000 | -$4,800 | Balance hit $48,200. Account closed. |
Look at what happened here. On Day 2, this trader made $5,500 in profit—an incredible day. But that profit immediately moved the threshold from $47,500 to $53,000. When the market reversed over the next few days, the threshold stayed at $53,000 while the balance fell.
Here's the painful part: On Day 5, this trader was still up $3,200 from where they started. But they violated anyway because the threshold had moved up so much. The threshold doesn't care about your starting balance—it only cares about your highest balance.
Scenario 3: The intraday spike (most common mistake)
This scenario trips up traders who don't realize the threshold updates in real-time. They think "I'll just let this trade run and see what happens" without realizing every tick of unrealized profit is moving their floor.
Example: The runner that cost you
You start the day at $50,500 with a threshold of $48,000. You enter a trade that runs beautifully. Your P&L shows +$4,000 unrealized, putting your balance at $54,500.
The market reverses. You close the trade at +$500, ending the day at $51,000.
What most traders think: "Great, I'm up $500. Threshold should be around $48,500."
What actually happened: Your threshold moved to $52,000 (based on the $54,500 peak) the moment you hit that high. You're now trading with a threshold that's $1,000 above your current balance.
You're already in violation and you don't even know it.
Watch your unrealized P&L. Every dollar of floating profit moves your threshold up in real-time. This is why some traders prefer to take partial profits rather than letting winners run—it's not just about locking in gains, it's about managing where the threshold goes.
Scenario 4: The close call (recovered just in time)
Not every story ends in violation. Here's a trader who got dangerously close but managed to recover.
Close call with recoveryClose Call
$54K$52K$50K$48K$46KDay 1Day 2Day 3Day 4Day 5Day 6
Day | High Balance | End Balance | Threshold | Buffer |
1 | $50,000 | $50,000 | $47,500 | $2,500 |
2 | $52,000 | $52,000 | $49,500 | $2,500 |
3 | $52,000 | $50,700 | $49,500 | $1,200 |
4 | $52,000 | $49,800 | $49,500 | $300 |
5 | $52,000 | $50,300 | $49,500 | $800 |
6 | $53,500 | $53,500 | $51,000 | $2,500 |
On Day 4, this trader was just $300 away from violation. One bad trade could have ended everything. But they stayed disciplined, traded small, and recovered. By Day 6, they hit the target and locked in the pass.
The lesson: When your buffer gets thin, trade smaller—not bigger. The traders who survive close calls are the ones who reduce risk when they need to, not the ones who try to "make it back" with larger positions.
Account sizes and trailing amounts
Different account sizes have different trailing amounts. Here's the full breakdown:
Account Size | Trailing Amount | Initial Threshold | Profit Target |
$50,000 | $2,500 | $47,500 | $53,000 |
$75,000 | $3,000 | $72,000 | $78,000 |
$100,000 | $3,500 | $96,500 | $103,500 |
$150,000 | $4,500 | $145,500 | $154,500 |
$200,000 | $6,000 | $194,000 | $206,000 |
Important: The trailing threshold only applies during evaluation. Once you pass and receive a funded account, this rule goes away.
Practical tips from traders who passed
These aren't theoretical suggestions—they're strategies that have helped real traders get through their evaluations:
Check your threshold before every session. Make it part of your routine. Know exactly how much room you have before you place any trade.
Be extra careful the day after a big win. Your threshold just moved up significantly. This is the most dangerous time—reduce your position size.
Consider partial profits on runners. Yes, you might leave money on the table. But you also won't accidentally spike your threshold to a dangerous level.
Set a personal daily loss limit. Something like $500-$800 depending on your account size. Hit it and stop trading for the day. No exceptions.
When your buffer gets thin, trade smaller. If you're within $500 of your threshold, this is not the time for full-size positions.
Never revenge trade. Had a losing morning? The worst thing you can do is try to make it back with larger positions. Trade smaller or stop for the day.
Track your floating P&L, not just closed trades. Remember, the threshold moves on unrealized gains too. That +$3,000 winner you're holding? Your threshold already moved.
What happens if you violate?
Your evaluation ends immediately and the account is closed. You'll receive a notification with the details of what happened.
Here's what you can do:
Reset your evaluation and try again
Review your trades to understand what went wrong
Adjust your risk management before your next attempt
Violating isn't the end of the world. Most funded traders didn't pass on their first try. The ones who eventually succeed are the ones who learn from each attempt and come back with better discipline.
Quick reference
The threshold trails your highest balance in real-time. Not end-of-day. Not closing balance. Your highest balance at any point.
It never moves back down. Once it moves up, it stays there.
It stops trailing once you hit the profit target. Get to the target and you're safe.
If you violate, you can reset and try again.