At FundedSquad, protecting your capital while giving you room to grow is our top priority. Smart Drawdown is a hybrid loss-limit system that begins as a trailing drawdown and then permanently locks once a set profit threshold is reached. This mechanism rewards consistent gains while providing a fixed safety net after you have proven early profitability.
How Smart Drawdown Works
The Smart Drawdown starts at 6% of the account’s starting balance, just like a trailing drawdown. As your account equity increases, the drawdown tightens—reducing the maximum allowable loss by the same percentage as your unrealised profit.
Once your equity reaches a 3% profit from the starting balance, the drawdown locks permanently at 3% of the starting balance. After this point, the loss limit no longer trails—even if you grow the account further, make withdrawals, or reset the account.
This gives you the flexibility of a trailing drawdown in the early stages and the security of a fixed drawdown once you’ve established initial profits.
Accounts Using Smart Drawdown
Account Type | Smart Drawdown |
Squad Instant Funded | 6% |
Example 1: $25,000 Instant Account
Starting Balance: $25,000
Initial Drawdown (6%): $1,500
Initial Maximum Drawdown Figure: $25,000 – $1,500 = $23,500
Trade Scenario 1:
The trader makes a 2% unrealised profit ($500).
New Equity: $25,500
Trailing Drawdown: 6% – 2% = 4%
New Drawdown Amount: 4% of $25,000 = $1,000
New Drawdown Limit: $25,000 – $1,000 = $24,000
Trade Scenario 2:
The trader reaches a 3% profit ($750).
New Equity: $25,750
Locked Drawdown: 3% of $25,000 = $750
Permanent Drawdown Limit: $25,000 – $750 = $24,250
From this point onward, the drawdown is fixed at $24,250, regardless of future profits or withdrawals.
Example 2: $50,000 Instant Account
Starting Balance: $50,000
Initial Drawdown (6%): $3,000
Initial Maximum Drawdown Figure: $50,000 – $3,000 = $47,000
Trade Scenario 1:
The trader makes a 2.5% unrealised profit ($1,250).
New Equity: $51,250
Trailing Drawdown: 6% – 2.5% = 3.5%
New Drawdown Amount: 3.5% of $50,000 = $1,750
New Drawdown Limit: $50,000 – $1,750 = $48,250
Trade Scenario 2:
The trader reaches a 3% profit ($1,500).
New Equity: $51,500
Locked Drawdown: 3% of $50,000 = $1,500
Permanent Drawdown Limit: $50,000 – $1,500 = $48,500
Once the 3% profit threshold is reached, the drawdown stays permanently locked at $48,500, ensuring consistent protection while letting you scale your profits.
Proper management within the Smart Drawdown framework ensures your trading account remains compliant while safeguarding profits.
For questions, contact support@fundedsquad.com.