What is High-Water Mark (HWM)?
A high-water mark (HWM) is the highest peak equity value an account has attained. In prop trading, the high-water mark is the critical anchor from which trailing drawdowns are subtracted, meaning every new equity peak permanently raises your liquidation floor until the lock threshold is reached.
Mathematical Calculation
The High-Water Mark at time t is the maximum of the prior High-Water Mark and current equity. It is monotonically non-decreasing (it can only stay flat or step upward; it never drops on a losing trade).
Real-World Numerical Simulation
High-Water Mark Ratcheting Across 3 Trading Sessions
Day 1 Close: Account rises to $103,000. New HWM = $103,000. Liquidation floor rises from $97,000 to $100,000.
Day 2 Close: Account loses -$1,500, dropping balance to $101,500. HWM remains locked at $103,000, and the liquidation floor stays at $100,000 (leaving $1,500 of buffer).
Day 3 Close: Account rallies to $104,500. New HWM = $104,500 (though on most EOD plans, the floor permanently stops trailing once locked at the $100,000 starting balance).
Interactive Equity Curve With High-Water Mark Dashed Line
On your main LogToLast dashboard, the Equity Curve chart plots your balance alongside a dashed High-Water Mark line. Hovering over any dip warns you of your exact underwater drawdown depth and post-trade locked buffer.
Institutional Comparison Matrix
| Account Metric | Current Realized Balance | High-Water Mark (HWM) |
|---|---|---|
| Directional Movement | Fluctuates up and down with every trade | Monotonically non-decreasing (only steps up) |
| Drawdown Role | Determines current distance above the floor | The anchor from which trailing drawdown is subtracted |
| Dashboard Visualization | Solid blue/green Equity Curve line | Dashed High-Water Mark reference line on LogToLast charts |
Monitored Prop Firms Applying This Rule
Frequently Asked Questions
Stop Tracking High-Water Mark (HWM) Manually in Spreadsheets
On your main LogToLast dashboard, the Equity Curve chart plots your balance alongside a dashed High-Water Mark line. Hovering over any dip warns you of your exact underwater drawdown depth and post-trade locked buffer. Test our 5-engine trading OS—including 20+ account cloud & MT5 replication, Playbook Active Enforcer, AI Journal, and Native Ctrl+C Backtest Lab—for $0.00 today during your 14-day Elite trial.
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