The daily drawdown limit is an important rule that applies to all phases of trading at MyFundedFX. It establishes a maximum threshold for the equity decrease within a single trading day. Here's a better explanation of how the daily drawdown limit works, along with three different examples:
1. Definition and Calculation:
The daily drawdown limit is set at 5% for all phases. It means that at any moment during the trading day (EE(S)T – Eastern European Summer Time), the decrease in equity should not exceed this predetermined limit. To calculate the current daily loss, you subtract the current equity from the balance at the start of the day using the formula: Current daily loss = balance at the start of the day - current equity.
2. Example 1:
Suppose you are trading a $100,000 account, and your starting balance for the day is also $100,000. In this case, your maximum daily loss value would be 5% of $100,000, which is $5,000. It means that your equity should not decrease by more than $5,000 in a single trading day to comply with the daily drawdown limit.
3. Example 2:
Let's say you have accumulated a profit of $9,000, and your current balance stands at $109,000. To calculate your daily loss, you apply the formula mentioned earlier: $109,000 - 5% = $5,450. This new daily loss level becomes $103,550. The 5% drawdown limit is always calculated based on your daily starting balance.
4. Example 3:
Consider another scenario where your starting balance for the day is $150,000. Applying the 5% drawdown limit, your maximum daily loss would be $7,500 (5% of $150,000). This means that your equity should not decrease by more than $7,500 during the trading day to stay within the daily drawdown limit.
The daily drawdown limit serves as a risk management measure, ensuring that traders control their equity decrease within a specified range during each trading day. By adhering to this rule, traders can protect their virtual capital and maintain a disciplined approach to managing losses.
If you have any further questions or need additional clarification regarding the daily drawdown limit or any other trading rules, please reach out to our support team. We are here to provide you with the necessary guidance and support for successful trading at MyFundedFX.
Disclaimer:
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