Max Drawdown (trailing)
Max Drawdown on our Futures For Traders Challenge, including its Master Account is calculated based on the highest balance ever recorded on the account.
How It Works:
At the beginning, your highest recorded balance on the account is used as the starting point for your trailing Max Drawdown calculation. For example, if your initial highest balance is $100,000, and your trailing Max Drawdown percentage is 6%, the drawdown is calculated as:
6% of $100,000 = $6,000
Your trailing Max Drawdown threshold is set at $94,000.
If your highest balance reaches $103,000, the trailing Max Drawdown recalculates as:
6% of $103,000 = $6,180
Your new trailing Max Drawdown threshold becomes $96,820.
Locking of Trailing Max Drawdown:
The trailing Max Drawdown will never exceed your initial balance.
For example:
If your initial balance was $100,000 and your highest balance reaches $108,000, your Max Drawdown would be $101,520 (6% of $108,000). However, this value is locked at your initial balance of $100,000, meaning the trailing Max Drawdown will remain at $100,000.
Similarly, if your highest balance reaches $110,000, the Max Drawdown will still remain at $100,000.
Payouts and Safety Cushion
If you request a payout from an account with a trailing Max Drawdown, it is crucial to always leave a safety cushion. On the Master Account in a One-Step Challenge and Instant Master Account, withdrawals count as a loss.
For example:
If you have an $8,000 profit, bringing your balance to $108,000, you should not withdraw the entire $8,000.
Withdrawing the full profit would breach your account since you would have no available balance above your Max Drawdown level ($100,000) left to accommodate the withdrawal.
If you're unsure about our rules, please reach out to our specialized support team. As experienced traders themselves, they understand the challenges you face and are ready to help.