For traders participating in the 2-Step Challenges, a maximum Overall Drawdown of 10% phase 1 and 8% for phase 2 from their initial balance is allowed.

Let's consider an example to illustrate this calculation. Suppose you have purchased an Evaluation $100,000 account.

Here's how the calculation works:

Case 01:

Suppose you start with a $100,000 account, and your Overall Maximum Loss Limit is set at 10% ($10,000).

This means that if your account balance/equity ever drops below $90,000, it will be considered a violation of the rule.

To avoid any such violations, you must ensure that your account balance/equity remains above $90,000.

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 ($10,000 original limit + $4,000 profit).

This means that you can sustain a total loss of $14,000, and if your account balance/equity ever drops below $90,000, 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 $8,000 ($98,000–$90,000).

Therefore, if your account balance/equity drops below $90,000 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.