Daily Drawdown Calculation Update (Effective February 1, 2026)
What is changing with the Daily Drawdown rule?
For all newly created accounts from February 1, 2026, the Daily Drawdown will be calculated using the greater of:
End-of-day Balance (closed P&L only), or
End-of-day Equity (balance + open P&L)
This means that if your equity is higher than your balance at the end of the trading day, the drawdown limit will be calculated using equity instead of balance.
Which accounts are affected by this change?
Only new accounts created on or after February 1, 2026
Accounts issued when progressing to a new phase (where applicable)
Active accounts created before this date are not affected.
When is Equity used for Daily Drawdown?
Equity is used only when it is higher than the balance at end of day, typically when profitable trades remain open.
Examples (Equity Used):
$100,000 account – 5% daily drawdown
Balance: $100,000
Equity: $102,000
Drawdown calculated from $102,000
Daily breach level: $96,900
$50,000 account – 5% daily drawdown
Balance: $50,000
Equity: $51,500
Drawdown calculated from $51,500
Daily breach level: $48,925
$200,000 account – 4% daily drawdown
Balance: $200,000
Equity: $206,000
Drawdown calculated from $206,000
Daily breach level: $197,760
When is Balance used for Daily Drawdown?
Balance is used when:
There are no open trades, or
Open trades are in a loss, making equity lower than balance
Examples (Balance Used):
No open trades
Balance: $100,000
Equity: $100,000
Drawdown calculated from balance
No change to current rule
Open trades in loss
Balance: $100,000
Equity: $98,500
Drawdown calculated from balance
No change to current rule
Small unrealized loss
Balance: $75,000
Equity: $74,200
Drawdown calculated from balance
No change to current rule
Does this affect my current active account?No.
This change does not affect any active accounts. It applies only to:Newly created accounts from February 1, 2026
Accounts issued at the next phase of a trader’s journe
Why was this change introduced?
This update helps ensure consistent and fair risk management by accounting for unrealized profits when positions remain open overnight.
Daily Drawdown before 1st February 2026:
1-Step Account: 5% of the previous day’s ending balance (resets at 5:00 PM EST).
2-Step Account: 4% of the previous day’s ending balance (resets at 5:00 PM EST).
The drawdown calculation is based on the balance at 5:00 PM EST (server time), when the system resets daily. This ensures that each day’s limit is set according to the prior day’s ending balance.
Example Scenarios:
Example 1: Day 1 (2-Step Account)
Starting Balance: $100,000. The previous day’s ending balance at 5:00 PM EST is also $100k.
The daily Drawdown Limit for the Day is: 4% of $100,000 = $4,000
Breach limit for day 1: $100,000-$4,000 = $96,000. Your account equity cannot drop below $96,000 on Day 1.
Example 2: Day 3 (2-Step Account)
Previous Day’s Ending Balance (Day 2, 5:00 PM EST): $110,000
Daily Drawdown Limit for day 3 is: 4% of $110,000 = $4,400
Breach limit for day 3: $110,000-$4,400 = $105,600. For Day 3, your equity cannot drop below $105,600 ($110,000 - $4,400).
Each subsequent day’s drawdown limit is recalculated based on the previous day’s ending balance. For example, the drawdown level for Day 4 will be determined by the ending balance on Day 3 at 5:00 PM EST.
Maximum Overall Drawdown: 1-Step Account
Initial Setup: The Maximum Trailing Drawdown is set at 6% of your starting balance. It is calculated based on the closed balance (not equity) and trails your account until you achieve a 6% return.
Lock-in Point: Once you reach a 6% return, the drawdown stops trailing and is permanently locked at your starting balance.
Example:
Starting Balance: $100,000
Maximum Trailing Drawdown: $94,000 (6% below starting balance).
Scenario 1:
You grow your account to $102,000 in closed balance (new high-water mark).
Your Maximum Trailing Drawdown is now $96,000 (6% below $102,000).
Scenario 2:
You grow your account to $106,000 in closed balance.
The drawdown locks at your starting balance of $100,000 (since you’ve achieved a 6% return).
From here on: You would only breach this rule if your account closed balance falls back to $100,000. However, the daily drawdown rule still applies.
For instance: If your account reaches $170,000, you won’t breach the overall drawdown as long as your closed balance doesn’t fall to $100,000. However, ensure you don’t exceed the 5% daily drawdown limit.