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Evaluation 2-Step
The daily drawdown is 5% of the account’s starting balance of the day. If your account balance/equity falls below it will be considered a violation of the rules
- The daily drawdown limit resets at midnight (Brokers Time)
Example 1: Imagine you start trading with a $50,000 account and your daily drawdown is 5% ($2500). If your account balance/equity falls below $47,500 at any point in a day it will be considered a violation of the rules.
Example 2: Imagine you start trading with a $50,000 account and you gain a 2% ($1000) profit. Your daily drawdown will then increase to 7% ($3500) for the given day. If your account balance/equity falls below $47,500 it will be considered a violation of the rules.
Example 3: You have a $100,000 account, the maximum daily loss limit is $5,000, and you have gained $1,000 in profit on that day. In such case, you will be allowed to lose $1,000 (your profit) + $5,000 (your daily loss limit) = $6,000 for that day only. The next day your daily loss limit will reset and will be calculated on the initial balance which is $100k. So, on that day even if you lose $5,000 you will still have a $1,000 permitted loss.
