The Maximum Daily Drawdown Limit is 3% of the Initial Balance.
Example 1:
For a $100,000 2 Step Prime (Beta) Account, the Daily Drawdown is 3% of the Initial Balance.
Day 1:
Starting Balance/Equity: $100,000
Allowed Daily Drawdown: 3% of $100,000 = $3,000 (stop-out limit = $97,000)
Example 2:
Day 2:
End of Day Balance (Day 1): $104,000
End of Day Equity (Day 1): $103,000
At 5 PM EST, if unrealised positions are open, then 3% of Initial Balance will be deducted from the higher of the two.
In Example 2 above, since Balance is higher than Equity, the stop-out limit will become:
$104,000 – (3% of $100,000) = $104,000 – $3,000 = $101,000
If either Equity or Balance reaches this limit, it would result in a breach of the Daily Drawdown Limit.