The maximum total drawdown is a risk management rule that limits the amount a trader can lose during their entire trading period.

The maximum total drawdown limit is 12% or 15%. Therefore, the equity or the balance of the account must not fall below 88% or 85% of the initial account balance, both open and closed positions, including commissions and swaps.

Formula: Maximum Total Drawdown = Initial Account Balance x 12% or 15%.

Example:

If the trader has an account of $100,000, his maximum total drawdown limit is $12,000 (12% of $100,000) or $15,000 (15% of $100,000)

If the trader then makes any profit, the drawdown limit still remains the same, allowing him to build a drawdown buffer.

To better understand your limits, always follow your account loss analysis, which is located in your dashboard.