---
title: "Balance-based drawdown Meaning - Get Funded Now"
description: "A drawdown measured against closed balance rather than live equity. Floating losses on open positions do not move the breach level; only realised results…"
url: "https://getfundednow.com/glossary/balance-based-drawdown"
language: "en"
last_modified: "2026-09-22"
publisher: "Get Funded Now (getfundednow.com)"
translations:
  es: "https://getfundednow.com/es/glossary/balance-based-drawdown"
  pt-BR: "https://getfundednow.com/pt-br/glossary/balance-based-drawdown"
  fr: "https://getfundednow.com/fr/glossary/balance-based-drawdown"
  it: "https://getfundednow.com/it/glossary/balance-based-drawdown"
  de: "https://getfundednow.com/de/glossary/balance-based-drawdown"
disclosure: "All trading at Get Funded Now is simulated. 'Funded' means a simulated or virtual account; GFN is not a broker and does not hold client funds."
---

Drawdown and risk limits

# Balance-based drawdown

A drawdown measured against closed balance rather than live equity. Floating losses on open positions do not move the breach level; only realised results do, once a trade is closed.

GFN’s figure

GFN monitors account equity, not just closed balance: floating losses on open positions count toward both the daily loss limit and the maximum drawdown on every programme.

- **Floating losses**: Count toward the limits
- **Closed losses**: Count within the daily calculation period
- **Trading costs**: Commission, spread and slippage reduce the buffer

In detail

## Balance-based drawdown, explained

Balance-based measurement is the looser of the two, because an open position can sit well underwater without registering. It is also the more dangerous to rely on, since a trader can be far past the limit on paper and only discover it at the moment the trade closes.

Most prop firms measure at least one of their limits on equity precisely to avoid that, so read which basis applies to each rule rather than assuming one covers both.

[The rule in full →](https://getfundednow.com/rules/max-drawdown) · [Rules handbook](https://getfundednow.com/rules) · [More drawdown and risk limits](https://getfundednow.com/glossary/category/drawdown)

Related

## Terms that come with it

Most rules only make sense next to the ones they interact with. These are the entries this one depends on.

- [Equity-based drawdown](https://getfundednow.com/glossary/equity-based-drawdown) - A drawdown measured against live account equity, which includes the unrealised profit and loss of every open position. The breach level can be touched while a trade is still running, before anything is closed.
- [Maximum drawdown](https://getfundednow.com/glossary/maximum-drawdown) - The total loss an account may take before it is failed. Expressed as a percentage of the starting balance, it sets a floor: touch it and the account breaches, whatever the account has made up to that point.
- [Daily loss limit](https://getfundednow.com/glossary/daily-loss-limit) - The most an account may lose in one trading day before it breaches. Calculated as a percentage of the previous day's closing level, it resets at a fixed time each day and is the rule that ends most evaluations.
- [High-water mark](https://getfundednow.com/glossary/high-water-mark) - The highest level an account has ever reached. On a trailing drawdown it is the reference point the floor is measured down from, so every new high permanently moves the breach level upward.

Also governed by [/rules/max-drawdown](https://getfundednow.com/rules/max-drawdown)

[Drawdown floor](https://getfundednow.com/glossary/drawdown-floor) · [Buffer](https://getfundednow.com/glossary/buffer) · [Hard breach](https://getfundednow.com/glossary/hard-breach)

Ready when you are

## Your capital stays yours. The risk is ours.

One evaluation fee, no time limits and up to 90% of simulated profits. Pick an account size and your credentials arrive by email within minutes.

[Start your challenge →](https://getfundednow.com/challenges) · [Read the rules](https://getfundednow.com/faq)

No subscriptions or hidden fees

Payouts every 14 days

$400,000 max total allocation

---

Source: https://getfundednow.com/glossary/balance-based-drawdown
Facts about Get Funded Now in one file: https://getfundednow.com/llms.txt