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How do you calculate Drawdown? (Rapid Challenge)
How do you calculate Drawdown? (Rapid Challenge)

Rapid Challenge Drawdowns

Updated over a month ago

How is the Daily Drawdown (DD) calculated in the Rapid Challenge?

The Daily Equity Loss Threshold indicates the maximum amount of equity that can be lost within a single trading day without exceeding the account's allowable limit. This threshold is a predetermined percentage of the daily starting equity.

Example: Imagine the trading day starts with an account balance of $100,000. The initial daily loss limit is $97,000. If successful trading raises the balance to $103,000, the daily loss limit adjusts to $100,000 (3% of the initial balance subtracted from the updated balance of $103,000). Dropping below $100,000 would mean breaching the daily limit. This recalculated value resets each trading day to reflect 3% of the new daily starting equity, adjusting as necessary.



How is the Max Drawdown (Trailing) calculated in the Rapid Challenge?

The Max Drawdown in Rapid Challenges is trailed dynamically based on the highest equity achieved at any point during the day.

Example 1:
Starting with a $100,000 account.

  1. Your Max Drawdown is a dynamic 4%, meaning the maximum equity loss can only reach 4% below the highest point hit during the day.

  2. If your equity rises to $103,000 and then drops to $100,000, you’ll still be within the Max Drawdown limit and can continue trading.

Example 2:
With a $100,000 account, if your equity reaches $102,000, the Max Drawdown will adjust accordingly.

  1. The account can now go down to $98,000 (4% below $102,000).

  2. If your equity increases to $106,000, the Max Drawdown will trail up, setting the new limit at $100,000.

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