How does the daily drawdown work?
Traders can have a maximum daily drawdown of 6% from their initial starting equity (including all floating losses & profits), within a 24-hour period starting at 5 p.m. EST.
For example:
If you have a starting balance of $100,000, 6% of this equals $6,000. This means if your account falls below $94,000 within any given day you are in violation of the “daily drawdown” rule. On the other hand, if you end any given day with a profit let’s say $10,000, your starting capital will increase to $110,000 and your new maximum daily loss will now be $6,600.
How do I calculate the Daily Drawdown?
The Maximum Daily Loss of 6% has a constant value of 6% of your initial account’s size. This means that if a trader has a $100,000 account, their maximum daily loss would be $6,000 (6% of $100,000) at any given time during the challenge.
It’s important to note that the maximum daily loss of 6% is based on the trader’s equity at the end of the day (EOD), which is calculated at 00:00 server time GMT+3 5 pm EST (depending on the changes in daylight savings time). This includes both the realized and unrealized profit and loss (P&L) of the trader’s open positions.
For example, in the case of a $100,000 account, if a trader has lost $5,999 on the first day of trading, their equity at the end of the day would be $94,001. The maximum daily loss threshold would reset the next day, allowing the trader to potentially lose up to $5,999 again without breaching the threshold.
Violation of this rule will result in an automatic failure on your challenge account. The same Daily Drawdown applies to all 3 phases (Evaluation, Verification, and Funded) of every challenge.
Remember that we don’t recommend trading one hour before and after the market rollover, because of bad market conditions caused by low liquidity and high volatility.
How does the overall drawdown work?
For the duration of your Challenge, the capital in your trader account cannot, at any given time, drop below 11%.
For example: if you have a starting balance of $100,000, the drawdown limit would be $11,000. This means that if your account balance falls below $89,000, you would violate the “overall drawdown” rule.
To calculate the drawdown limit, simply multiply your starting balance by 0.11. If you violate this rule, it will result in an automatic failure on your Challenge. It’s important to note that the same overall drawdown limit applies to all three phases (Evaluation, Verification, and Funded) of every Challenge.
- Additionally, we advise against trading one hour before and after the market rollover due to the potential for unfavorable market conditions caused by low liquidity and high volatility. We want to ensure that you have the best chance of success during your Challenge, and adhering to our risk management policies is crucial to achieving your goals.
Good luck with your Challenge!
