Balance-based drawdown rules are often considered more forgiving for prop firm traders, especially those who use swing or news-based strategies. These models calculate risk based only on closed trades, allowing flexibility with floating positions. But which firms offer these, and are they really better for traders?
What Is Balance-Based Drawdown?
With balance-based drawdown, the maximum loss is calculated using your account balance—not real-time equity. That means you can hold floating losses, and as long as you don’t close them, they don't count against your drawdown limits.
Example: If your max daily loss is $500 on a $10,000 account, and you're floating a $300 loss but haven’t closed any trades today, your drawdown is still $0 for the day.
Why Traders Prefer Balance-Based Models
- More flexibility with trade management
- Safer to hold positions through drawdown phases
- Ideal for swing and fundamental traders
Top Prop Firms with Balance-Based Drawdown
| Prop Firm | Best Prop firms with Balance-Based Drawdown |
|---|---|
| FunderPro Futures | |
| FXIFY | (All evaluations except Lightning and Instant Funding use balance-based drawdown.) |
| FundedNext | (All programs support balance-based drawdown.) |
| FTMO | (All programs support balance-based drawdown.) |
| Apex Trader Funding | |
| SabioTrade | |
| Hola Prime | (Most challenges support balance-based drawdown. Direct account does not.) |
| NeomAAA Funds | |
| Top One Futures | |
| Take Profit Trader | |
| ThinkCapital | (Firm offers balance-based daily drawdown for its funding programs.) |
| UltraCap Trading | |
| TX3 Funding (Toptier Trader Rebrand) | (Top Tier Challenge supports balance-based drawdown. Top Tier Plus does not.) |
| Topstep | |
| Blue Guardian | (Applies to Unlimited, Elite, and Three-step Guardian. Not applicable to Rapid and Instant Funding.) |
| FTUK | (All programs support balance-based drawdown.) |
| Funded Trading Plus | (Applies to Prestige Trader and Master Trader programs. Others do not.) |
| Top One Trader | |
| For Traders | |
| Elites Funding | |
| EverBlue Trader | |
| PIP Traders Funding | |
| Bold Fund | |
| 1of1 Funding | |
| Alpha Trader | |
| DNA Funded | |
| PROP365 | |
| Funded Squad | |
| Propel Capital | |
| Plutus Trade Base | (All programs support balance-based drawdown.) |
| Tycoon Funded | |
| Clarity Traders | |
| Upcomers | |
| Funded Prime | |
| SuperFunded | |
| TakeCap | |
| Earn2Trade | |
| City Traders Imperium | (All programs support balance-based drawdown.) |
| PipFarm | (All programs support balance-based drawdown.) |
| Tradexprop | (FX evaluations use static overall loss; Instant uses trailing overall loss.) |
Advantages of Balance-Based Drawdown
- Lets trades breathe longer
- Easier recovery from losses
- Great for longer-term strategies
Risks of Balance-Based Models
- May encourage bad habits if undisciplined
- Drawdowns can be hidden in floating positions
- Firms may tighten other rules to balance the risk
Conclusion
For traders who favor longer-term strategies, balance-based drawdown is a welcome feature. It provides breathing room and reduces anxiety from floating losses, allowing for more organic trade development. Choose this model if you're a calculated risk-taker with strong patience and strategy.
Frequently Asked Questions (FAQs)
It only considers losses from closed trades, ignoring floating losses when calculating daily or total drawdown.
Yes, it allows traders to hold positions through temporary drawdowns without being penalized.
Traders may develop poor habits by hiding large floating losses, which can be risky without proper discipline.
