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How does the Max Drawdown work?

During the first cycle, the maximum drawdown (Max DD) is "TRAILING" and calculated based on the peak equity including unrealized trades:

Example:

  • Initial balance: $50,000
  • Max trailing drawdown: $2,000
  • Failure threshold: $48,000
  • If the balance rises to $51,000, the new failure threshold is $49,000

Note:

  • Peak equity updates including unrealized P&L
  • If you breach your max drawdown with an open trade, your account will be automatically terminated

From the second cycle on (after requesting your first payout), the trailing Max DD no longer applies: the failure threshold becomes STATIC at your initial starting balance + $1 (e.g. $50,001 on a $50k account). See What happens after each payout cycle?