How Is Drawdown Calculated?

The 5% Max Daily Drawdown is originally and firstly based on your initial account balance at the reset time, before any trades are executed.

This resets each day at 00:00PM Market Watch Time. (5:00PM EST)

Secondarily, this metric is also calculated by the highest equity point.

Be sure not to go 5% lower than the initial balance at reset time, or 5% lower than the highest equity point in one day.

Attached below is the counting formula that our system uses in order to determine drawdown amounts.

Counting formula:

Highest initial balance at reset time *or* equity of the day (whichever is higher) – current equity.

The 10% Maximum Total Drawdown is also a trailing metric of the account balance and equity.

Example: If you start with a $100,000 account, your maximum loss level will be set at $90,000. If your account balance or equity reaches $110,000, your trailing drawdown meter will be set at $100,000. The trailing drawdown will always trail the highest balance or equity by 10%.

It is at the traders discretion to manage risk according to these rules when trading our funded accounts. A violation of these drawdown rules will result in a loss of the funded account.

Each trader will readily have access to their maximum daily and total drawdown levels on their dashboard at all times. Although keeping an eye on your balance is important during the “paradise trader” stage, it is also important that your equity swings do not meet a 5% difference in one day, or an 10% difference in total.