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How do the max daily drawdown and max total drawdowns work?
How do the max daily drawdown and max total drawdowns work?
Overview of the max daily drawdowns and max total drawdowns for The Challenge
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Written by Leveled Up Society
Updated over a week ago

Daily Drawdown

Maximum Daily Loss | 5%

Your maximum daily drawdown is set at 5%, calculated based on your initial account balance. For instance, if you have a $100,000 account, the maximum daily drawdown allowed would be $5,000. This amount is subtracted from your daily starting balance or equity (whichever is higher) at the beginning of each new day, which typically occurs around 5 PM EST.

The maximum daily drawdown is reset every day at approximately 5 PM EST, with a small variation of around 3 minutes.

To provide an example, suppose you have a $100,000 account and currently have an open trade that is showing a floating profit of $10,000 at the time of the day change at 5 PM EST. Your daily drawdown would be calculated as follows: $110,000 - $5,000 = $105,000. Therefore, if your account balance falls below $105,000 the next day, it would result in a violation of the maximum daily drawdown rule.

Maximum Drawdown

Maximum Total Drawdown | 8%

The maximum allowable total drawdown is set at 8% for your account. This means that the equity of your account, including both open and closed positions, as well as commissions and swaps, must not fall below 92% of the initial account balance.

To provide an illustration, let's say you have an initial account balance of $100,000. The maximum drawdown limit for your account would be $8,000. This implies that your account's equity should not drop below $92,000.

It's important to adhere to this maximum drawdown requirement to ensure the preservation of your account's equity and overall risk management.


Any violation of the rules above will result in the termination of your trading account and you will not be eligible to move forward in the program with that account.

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