It depends. Each company makes the rules here explicit and visible, as it is the most important thing for any trader.

E.g. at BlueCrest, each trader used to start a year with clean track record and some allocated capital. If you lose 2%, your allocation is halved. If you lose another 2%, you are out. However, if you won 5%, you can risk it, only the initial allocation matters.

For me, this policy is strange, as it clearly incentivizes people to take more risks at the end of the year (and risks are the currency here, you don't want to be predictable), so I assume the policy is different now. But it is always explicit.