The Maximum Daily Drawdown is the maximum loss permitted within a single trading day.
- The limit is calculated on the Initial Account Balance and measured from the start of each trading day (00:00 UTC).
The daily loss calculation includes:
- All closed trades.
- All unrealized losses from open positions.
If the account balance or equity drops below the permitted threshold at any point during the trading day, the Maximum Daily Drawdown is triggered, even if the account later recovers.
How is the Maximum Daily Drawdown calculated?
| Account type | Maximum Daily Drawdown |
|---|---|
| 1-Step / 2-Step (Challenge and Funded) | 4% of Initial Account Balance |
| Instant | 3% of Initial Account Balance |
| Flex (Evaluation and Funded) | 4% of starting balance, measured against opening equity for the day |
Formula
Current Daily Loss = Results of Closed Positions for the Day + Unrealized Result of Open Positions
This value must never exceed 4% of the Initial Account Balance on 1-Step / 2-Step accounts, or 3% on Instant accounts.
Examples
- Example 1: 1-Step Challenge (4% limit). Initial balance $10,000, so the limit is $400. Closed loss $150 plus unrealized loss $200 equals $350. Within the limit, no breach.
- Example 2: 2-Step Challenge (4% limit), breach. Initial balance $25,000, so the limit is $1,000. Closed loss $600 plus unrealized loss $450 equals $1,050. Limit exceeded: Daily Drawdown breach, even if the trade recovers later.
- Example 3: Instant (3% limit), breach. Initial balance $50,000, so the limit is $1,500. Closed loss $900 plus unrealized loss $700 equals $1,600. Breach, since it exceeds $1,500.
- Example 4: 1-Step Funded (4% limit), safe. Initial balance $100,000, so the limit is $4,000. Closed trades are +$500 and the unrealized loss is $1,200, so the net daily loss is $700. Well within the limit.
- Example 5: profitable start of day. Initial balance $100,000 on a 1-Step account and the day starts at $102,500. The limit is still $4,000, so the breach level is $98,500. The daily limit is always based on the Initial Balance, not on accumulated profits.
Key points
- Resets every day at 00:00 UTC, dashboard time.
- Both balance and equity are monitored.
- Profits never increase the daily allowance.
- Breaching the limit is a hard breach: immediate and permanent account termination. There is no daily pause on any account.