Daily Drawdown
Daily Drawdown applies uniformly to the Instant Master Account, One-Step Challenge, Two-Step Challenge, and their Master Accounts.
The only accounts without Daily Drawdown are the Two-Step Challenge PRO and its Master Account.
The Daily Drawdown is calculated based on your initial account balance at the start of each day. It is a percentage of that balance, and the limit is set when you first start your challenge (for example, 4% of the initial balance). Every time your account balance changes due to profits or losses, the drawdown limit remains based on the initial account balance for the day.
Each day, the sum of all your open and closed positions' losses should not exceed the Daily Drawdown limit.
At 16:00 CST the Daily Drawdown limit resets based on the initial balance of the new day.
Example: Daily Drawdown with an initial balance of $100,000
Initial Account Balance: $100,000
Daily Drawdown Limit: 4%
4% of $100,000 = $4,000
Your Daily Drawdown limit is $4,000. This means that the sum of all your losses (from open and closed positions) for the day should not exceed $4,000.
Open Position Loss: $3,000
Closed Position Loss: $2,000
Total Loss = $3,000 + $2,000 = $5,000
Since the total loss of $5,000 exceeds the Daily Drawdown limit of $4,000, this is a violation - hard breach.
Daily Reset
At midnight, the Daily Drawdown limit is reset based on the new initial balance for the next day.
Example: If your balance increases to $110,000 by the end of the day, the next day’s Daily Drawdown limit will be 4% of $110,000, which is $4,400.
Max Drawdown (balance-based)
Two-Step Challenge, Two-Step Challenge PRO and their Master Accounts
The Max Drawdown for our Two-Step Challenge, Two-Step Challenge PRO, and their respective Master Accounts is balance-based, meaning it is fixed and does not change.
This value is calculated as a percentage of your initial account balance, and it remains constant no matter how much profit you make or how much you withdraw.
How It Works:
Since balance-based Max Drawdown is based on the initial balance, it sets a fixed threshold below which your account’s balance/equity cannot fall. Breaching this level at any time results in a hard breach of our rules and the closure of your account.
Example of balance-based Max Drawdown
Initial Account Balance: $100,000
Max Drawdown Percentage: 8%
In this case, your account balance/equity must always remain above $92,000 to not violate our rules.
Scenario 1: Profitable Trading
You have an account of $100,000.
After a few days of successful trading, your balance grows to $120,000.
Even with the increased balance, your Max Drawdown (8%) threshold remains fixed at $92,000.
If your balance falls below $92,000 at any point, you will fail the account, regardless of prior profits.
Scenario 2: Withdrawing Profits
You withdraw $10,000, reducing your account balance from $110,000 to $100,000.
Despite the withdrawal, the Max Drawdown (8%) threshold remains tied to the original balance of $100,000, so the threshold is still $92,000.
Max Drawdown (trailing)
One-Step Challenge including it’s Master Account and Instant Master Account
Max Drawdown on our One-Step Challenge including it’s Master Account and on our Instant Master Account is trailing, which means it is calculated at the end of each trading day (16:00 CST) based on the highest equity ever recorded on your account.
How It Works:
At the beginning, your highest recorded equity on the account is used as the starting point for your trailing Max Drawdown calculation. For example, if your initial highest equity is $100,000, and your trailing Max Drawdown percentage is 6%, the drawdown is calculated as:
6% of $100,000 = $6,000
Your trailing Max Drawdown threshold is set at $94,000.
If your highest equity reaches $103,000, the trailing Max Drawdown recalculates as:
6% of $103,000 = $6,180
Your new trailing Max Drawdown threshold becomes $96,820.
Locking of Trailing Max Drawdown:
The trailing Max Drawdown will never exceed your initial balance.
For example:
If your initial balance was $100,000 and your highest equity reaches $108,000, your Max Drawdown would be $101,520 (6% of $108,000). However, this value is locked at your initial balance of $100,000, meaning the trailing Max Drawdown will remain at $100,000.
Similarly, if your highest balance reaches $110,000, the Max Drawdown will still remain at $100,000.
Payouts and Safety Cushion
If you request a payout from an account with a trailing Max Drawdown, it is crucial to always leave a safety cushion. On the Master Account in a One-Step Challenge and Instant Master Account, withdrawals count as a loss.
For example:
If you have an $8,000 profit, bringing your balance to $108,000, you should not withdraw the entire $8,000.
Withdrawing the full profit would breach your account since you would have no available balance above your Max Drawdown level ($100,000) left to accommodate the withdrawal.
If you're unsure about our rules, please reach out to our specialized support team. As experienced traders themselves, they understand the challenges you face and are ready to help.