What Is a High-Water Mark in Prop Trading?

The high-water mark is the highest balance or equity your account has reached. Trailing drawdowns are measured from it, so every new high lifts the level your account can’t fall below.

Example

On a $100,000 account with a 6% trailing drawdown, the floor starts at $94,000. If your account reaches $105,000, the high-water mark becomes $105,000 and the floor rises to $99,000. A fall back to $98,900 breaches the account, even though you’re still close to where you started.

How prop firms apply it

SabioTrade’s 6% maximum drawdown trails the highest balance. E8 One’s drawdown trails highest equity in real time, so open profits count. FXIFY’s One Phase trailing drawdown locks at the starting balance once you’re 6% in profit.

Practical tips

• Take partial profits so a running trade doesn’t set a high you can’t hold.
• Know whether your firm uses balance or equity for the high-water mark.
• Check whether and when the drawdown locks.

More terms in our prop firm glossary.

Balance vs equity high-water marks

A balance-based high-water mark only updates when trades close, so an open winner that reverses doesn’t raise the floor. An equity-based one updates on open profit, which is much stricter. End-of-day versions, common at futures firms, update only from the closing balance and sit between the two.

Prop firms we currently recommend

1. 1
   

   FundedNext Best for MetaTrader users

   Max account

   $200,000 (up to $4M through scaling)

   Profit split

   80%, up to 95%

   Fee from

   $59.99 USD (confirm at checkout)

   Our rating

   4.4 out of 5

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2. 2
   

   SabioTrade Best for learning while you evaluate

   Max account

   $1,000,000

   Profit split

   80–90%

   Fee from

   $139 USD (confirm at checkout)

   Our rating

   4.0 out of 5

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