For traders participating in the Instant Funding,
Funded: Maximum Overall Drawdown of 5%
How the calculation works:
Let's consider an example to illustrate this calculation. Suppose you have purchased an Evaluation $100,000 account.
Case 01:
Suppose you start with a $100,000 account, and your Overall Maximum Loss Limit is set at 5% ($10,000).
This means that if your account balance/equity ever drops below $95,000, it will be considered a violation of the rule.
To avoid any such violations, you must ensure that your account balance/equity remains above $95,000.
Case 02:
Now, let's say you start with a $100,000 account and make a $4,000 profit.
In this scenario, your overall maximum loss limit will increase to $14,000 ($5,000 original limit + $4,000 profit).
This means that you can sustain a total loss of $9,000, and if your account balance/equity ever drops below $91,000, it will be considered a violation of the rule.
Case 03:
Suppose you start with a $100,000 account, and after your Trading , you end up with a loss of $2,000 without any violations.
This means that you have to start your Trading with a balance of $98,000.
It's important to note that in this scenario, your Overall Maximum Loss Limit will not be reset in your Trading Account, and it will be reduced to $3,000 ($98,000–$95,000).
Therefore, if your account balance/equity drops below $95,000 at any point during your trading journey, it will be considered a violation of the rule.
(both in Challenge Phase/Prop Number One Phase).
In summary, understanding the Overall Maximum Loss Limit is crucial to managing your trading account.