When a Challenge or Scaling plan mentions that its Max Drawdown is trailing on its Highest Balance, this means that each time your *Current Balance (closed P&L) reaches a new peak (High WaterMark), then your Max Drawdown Limit will also trail with it.
Example:
John purchased a Challenge which has $100,000 starting balance and a Max Drawdown of 10% (trailing on Highest Balance), meaning his Max Drawdown limit is set at $90,000.
On Day 3 of his Challenge, his balance (closed P&L) peaks at $102,000, this means his new Max Drawdown limit will be set to $92,000.
If at any time John reaches a new all-time high in balance, of $104,000 for example, then his Max Drawdown limit will trail again up to $94,000.
*Current Equity: Unrealized P&L (Open Trades)
*Current Balance: Realized P&L (Closed Trades)