This is an essential trading metric that takes into account your Pnl (profit and loss) at the end of the day to calculate your drawdown for the following day. The trailing drawdown is therefore calculated at the end of the day in relation to your highest or lowest Pnl at the close of the trading day.
Example: you start with an account balance of $50,000, your max drawdown is $2,500 (minimum EOD account balance $47,500). If you trade and close a position with a profit of $1,000, your minimum account balance remains at $47,500 for the day. Only at the end of the day will your minimum account balance be recalculated for the following day. If you end the day with a profit of $1,000, your minimum account balance for the following day will be $2,500 (minimum account balance $48,500). If your account reaches the daily loss limit at any time during the day, your account will fail (details and explanatory table in the rules).