The word "drawdown" simply means a decline from a peak. In everyday trading it describes how far your account has dropped from its high point. At UZO, drawdown is more than a description: it is a hard limit. Cross it and the account or evaluation ends. Stay inside it and you keep trading.

Understanding drawdown is what separates traders who pass from traders who get surprised. It is not a punishment. It is the boundary inside which you are free to trade however you like.

A prop firm gives you a large simulated balance and lets you keep 90% of the profit you generate. In exchange, it needs to know you can manage risk and not blow up the account. Drawdown is that test. It is the single number that proves you can protect capital, which is the real skill professional trading is built on.

Because of this, drawdown matters more than your profit target. Hitting a target is optional in the sense that you can take your time, as there is no time limit on most products. But a drawdown breach is final. You can be up nicely and still end an account in a single careless trade if it pushes you past the limit. Discipline around drawdown is the whole game.

Almost every drawdown rule you will meet belongs to one of two families.

Think of daily drawdown as your speed limit for one day, and maximum drawdown as the edge of the road for the whole journey. You have to respect both at the same time. A loss can be fine for your maximum but still breach your daily limit, or the reverse.

The exact percentages depend on the product you choose. Instant, Instant Pro, and Instant 24h each publish their own daily and maximum figures, and One Step and Two Step have their own. Always read the figures shown on your dashboard and on live pricing for your specific account, because they are not all the same.

One Step and Two Step daily limits, and the One Step maximum, are shown on your dashboard and live pricing. We do not list them here so you always read the current figure for your account.

Maximum drawdown comes in two flavors, and the difference is simple.

Trailing limits protect profit you have already made, but they also mean the floor can sit higher than your starting balance once you are in the green. UZO's Dynamic Risk Shield works alongside this: it trails your equity up, then locks at your starting balance once you cross the profit threshold, so a bad run cannot erase the progress you have locked in. Static and trailing each get their own full article, linked below.

A breach is what happens when you cross a drawdown limit. It is automatic and final for that account.

One detail that trips up beginners: drawdown is measured on your equity, not just your closed balance. Equity includes the floating profit or loss of trades you still have open. That means an open losing position can breach a limit even before you close it. Knowing the difference between balance and equity is the natural next step after this article.

Treat your drawdown limit as the most important number on the screen. Size your positions so a normal losing streak stays well inside it, and you give yourself room to let your edge play out. That, more than any single winning trade, is how most funded traders survive. And to be honest about the odds: most evaluations do not pass, and respecting drawdown is the clearest dividing line between those who do and those who do not.