How is the Daily Drawdown (DD) calculated in 1-Step and 2-Step Challenges?
The Daily Drawdown is a constant 4% in 1-Step and 5% in 2-Step - of the starting balance, which subtracts from the Balance/Equity, whichever is higher at the start of the day.
This is a static drawdown, meaning you have the advantage of floating in profits without affecting their current daily drawdown.
Example 1:
You have a 100k account.
Your Daily Drawdown is static 4%. That means that the maximum your equity can go down to is $96,000.
The Equity could go to $103,000 and come back down to $96,000 the same day and still be able to trade.
Example 2:
You have a 100k account and you swing into the next day with an equity of $102,000.
Your Daily Drawdown would be calculated based on the highest statistic, which in this case would be $102,000 (Previous Day Equity).
Your next day's Daily Drawdown limit is $98,000 (4%) or $97,000 (5%) depending on the challenge.
Your Maximum overall Drawdown will remain static from the starting balance of $100,000. That means that the maximum it can go down to is $94,000 (6%) for 1-Step, and $90,000 (10%) in 2-Step.
How is the Max Drawdown (DD) calculated in 1-Step and 2-Step Challenges?
The Maximum Allowable Loss Limit is the maximum amount of equity you can lose before your account is considered failed. This limit is fixed and does not change with fluctuations in your account balance.
Example:
In a $100,000 1-step challenge, the maximum loss limit is set at $94,000. Even if your account balance increases, the maximum loss limit will remain at $94,000, regardless of any profits made.
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