The Absolute Drawdown system sets a fixed maximum drawdown limit based on the starting balance. This limit does not adjust with equity growth or profits. If losses reach the designated drawdown threshold, the account is breached, and the trader fails the challenge.
Drawdown Thresholds:
2-Step Challenge Accounts: Maximum drawdown is 8% of the starting balance.
Key Features
Fixed Limit:
The drawdown is always calculated as 8% of the starting balance, regardless of equity growth or profits.No Adjustment for Profits:
Traders are free to grow their accounts, but the maximum drawdown remains based on the original starting balance.Disqualification:
If losses reach the 8% threshold, the account is breached, and the trader is disqualified.
Examples
8% Drawdown (2-Step Challenge)
Account Size: $50,000
Maximum Drawdown (8%): $4,000
Drawdown Limit: $50,000 - $4,000 = $46,000
Scenario:
Trader grows equity to $55,000.
Drawdown Limit remains fixed at $46,000.
Max loss allowed before breach: $55,000 - $46,000 = $9,000.
If the trader’s equity drops back to $50,000, they can only lose $4,000 more before reaching the drawdown limit of $46,000.