Glossary · Prop-firm trading
High-water mark
The highest an account has been, from which a trailing drawdown is measured.
Some firms take it on equity, so an open position at a large profit raises it whether or not the profit is taken; some take it on closed balance. A trader who does not know which their firm uses can have the floor move under an open trade.
Worked example
An account that started at 50,000, ran to 53,200 in open profit and closed the day at 52,100 has a high-water mark of 53,200 at a firm that trails on equity, and 52,100 at one that trails on closed balance. With a 4% trail the floor sits 2,000 under whichever the firm uses: 51,200 or 50,100.
- Also called
- peak equity, peak balance