Static vs trailing drawdown
Static
The limit is calculated once from your starting balance and never moves. On a $100,000 account with an 8% static limit, the floor sits at $92,000 permanently. Trade up to $110,000 and the floor is still $92,000, so profit has genuinely widened your margin for error.
Used by: Two-Phase, Three-Phase, Crypto
Trailing
The limit follows your equity upward until it locks at the starting balance. On a $100,000 account with a 6% trailing limit, the floor starts at $94,000. Trade up to $104,000 and the floor rises with you, until it locks once it reaches your starting balance.
Used by: One-Phase, Instant Funded
Why the difference matters
Under a static limit, an early winning run buys you room. Under a trailing limit, an early winning run raises the floor beneath you, so giving those gains back can end the account even though your balance is still above where it started. Neither is better in the abstract. A trader who scales into winners and holds them usually prefers static; a trader who takes profit quickly and rarely sits on open gains is less affected by trailing.
Also worth separating
Daily loss limit vs maximum loss limit
The daily limit resets. The maximum loss limit does not. Breaching either one ends the account.
Balance vs equity
Equity includes open positions, balance does not. On the one-phase program the daily loss limit is measured on equity, based on the prior day's balance, which means an open losing position counts against you before it is closed.