EOD Drawdown, short for End of Day Drawdown, is a drawdown rule that is calculated based on the account balance at the end of the trading day. Unlike intraday or equity based drawdown, EOD drawdown only evaluates losses after all trades for the day are closed. Floating profit or loss during the day does not affect this rule until the trading day ends.
Prop firms use EOD drawdown to give traders more flexibility during active sessions. Traders can manage open positions throughout the day without the risk of triggering a drawdown violation before market close.
Why EOD Drawdown Matters in Prop Trading
EOD drawdown reduces pressure caused by intraday market fluctuations. Traders who hold positions for several hours or trade volatile sessions benefit from this structure because temporary losses during the day do not count toward violations.
Understanding how EOD drawdown is calculated helps traders plan exits and avoid holding losing positions overnight. Since the drawdown is assessed at the end of the day, traders must ensure all closed trades keep the balance above the allowed limit before the trading day resets.
Example of EOD Drawdown
A trader has a 100000 account with an EOD drawdown limit set at 95000. During the day, the equity drops to 93000 due to floating losses, but the trader closes positions before market close and finishes the day with a balance of 96000. Since the end of day balance is above the limit, no breach occurs.
