Trailing (Intraday) Drawdown
Definition
A Trailing Drawdown is a dynamic loss limit that adjusts upward as your account’s equity reaches new highs but does not decrease when losses occur.
10FOUR uses an intraday trailing drawdown to monitor a trader’s risk exposure throughout the trading day.
How It Works
During the evaluation and Sim Funded stages, the trailing drawdown is calculated intraday based on your peak account balance, which includes both realized and unrealized profits.
As your account grows, the drawdown limit moves upward accordingly, but it will never exceed the starting balance.
Example Setup
At the beginning of an account:
Starting Balance: $50,000
Maximum Trailing Drawdown: $2,000
Initial equity limit calculation:
$50,000 − $2,000 = $48,000
If Account Equity Increases
If your account reaches a new equity high:
New Equity High: $51,000
The drawdown limit adjusts accordingly:
$51,000 − $2,000 = $49,000
If Account Equity Declines
If your account value declines, the drawdown does not move downward.
However, if your equity falls below the most recently calculated drawdown limit, the account will be considered breached.
Monitoring Your Drawdown
Traders can monitor their remaining intraday drawdown limit directly within their trading platform.
Both realized and unrealized profits contribute to the calculation of the current equity high and trailing drawdown.