The 2-Step Speed Evaluation has a fixed Daily Drawdown Limit of 4%, based on the initial balance, and does not adjust with changes in Balance or Equity.
Example 1:
Account Size: $100,000
Daily Drawdown Limit: $4,000
Day 1:
Starting Balance/Equity: $100,000
Daily Drawdown: $4,000
Stop-Out Limit: $96,000 ($100,000 – $4,000)
Day 2:
Starting Balance/Equity: $106,000
Daily Drawdown: $4,000
Stop-Out Limit: $102,000
Example 2:
End of Day 1 Balance: $105,000
End of Day 1 Equity: $103,000
Daily Drawdown Limit: $4,000
At 5 PM EST, if unrealised positions are open, then 4% 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 ($105,000 – (4% of 100,000)) = $105,000 – $4,000 = $101,000. (A further $2,000 loss in Equity would breach the Limit)
If Either Equity or Balance reaches this limit, it would result in a breach of the Daily Drawdown Limit.