Max Drawdown:
Calculated as a fixed percentage of your initial balance.
Never changes, even if your account grows or you withdraw profits.
Daily Drawdown:
One Step, Two Step challenges and Instant Pilot include a daily loss limit (e.g., 3-5% of initial balance).
This restricts how much you can lose in a single day before violating rules.
💡How It Works
Max Drawdown Example:
Initial Balance: $100,000
Max Drawdown: 10% → $100,000 × 10% = $10,000
Threshold: $100,000 – $10,000 = $90,000 (must never be breached).
Scenario | Balance Change | Max Drawdown Threshold | Rule Check |
Starting Point | $100,000 | $90,000 | Safe |
Profit to $120K | $120,000 | $90,000 (unchanged) | Safe |
Floating Loss to $90K | $88,000 | $90,000 | Breach! (Account failed) |
Withdrawal of $10K | $110K → $100K | $90,000 | Safe |
Scenario 1: Profitable Trading
You turn $100K → $120K.
Max Drawdown stays at $90K (based on initial $100K).
Even at $120K, your balance cannot drop below $90K without failing.
✅ Safe: If your equity stays above $92K.
❌ Breach: If market drops your balance to $91K, account closes.
Scenario 2: Withdrawing Profits
Start: $100K
Grow to $110K, then withdraw $10K → New balance = $100K.
Max Drawdown remains $90K (still tied to initial $100K).
⚠️ Risk: If you withdraw too much, a small loss could push you under $90K.
Daily Drawdown
(If your challenge includes a daily limit, e.g., 5%)
Daily Loss Cap = 5% of $100K = $5,000
Allowed Loss Per Day: $95,000 ($100K – $5K).
Scenario | Balance Change | Daily Drawdown Threshold | Rule Check |
Starting Point | $100,000 | $95,000 | Safe |
Profit to $120K | $120,000 | $114,000 | Safe |
Floating Loss to 115k | $115,000 | $109,250 (115k x 5%) | Safe |
Loss to $94K | $94,000 | $95,000 | Breach! (Account failed) |
Withdrawal of $10K | $110K → $100K | $95,000 | Safe |
Critical⚠️
Max Drawdown is permanent – Profits/withdrawals don’t change it.
Daily limits reset each day but are based on the original balance.
Withdrawals reduce your buffer – Plan carefully to avoid accidental breaches.
Max Drawdown (Trailing) – Instant Pilot & Turbo Accounts
The Max Drawdown is calculated based on the highest recorded balance in your account.
💡 How It Works:
Starting Point: Your initial highest balance sets the baseline.
Example: Initial balance = $100,000 | Max Drawdown = 5%
5% of $100,000 = $5,000
Threshold = $100,000 – $5,000 = $95,000
Adjusting for New Highs: If your balance increases, the threshold recalculates.
Example: New highest balance = $103,000
5% of $103,000 = $5,150
New Threshold = $103,000 – $5,150 = $97,850
Locking the Drawdown:
The Max Drawdown never exceeds your initial balance, even if profits grow.
Example:
Initial balance = $100,000
Highest balance later = $110,000
Calculated Threshold: $110,000 – 5% = $104,500
Locked Threshold: $100,000 (initial balance)
**In this case, your maximum drawdown locks at $100,000, leaving you with $10,000 of drawdown room before reaching your limit.
Payouts & Safety Cushion
When withdrawing profits:
Any withdrawal counts as a loss (reducing your balance).
After the first payout, the Max Drawdown locks at your initial balance.
Key Rule:
Always leave enough safety cushion to avoid breaching the drawdown.
Example:
Initial balance = $100,000
Current balance = $108,000 (after $8,000 profit)
Max Drawdown Threshold = $100,000 (locked after first payout)
Withdrawing $8,000 → New balance = $100,000
Risk: If the market moves against you, you could instantly breach the $100,000 threshold.
Safer Approach: Withdraw less than $8,000 to maintain a buffer.
**In this case, if you request for a $5,000 payout, your maximum drawdown locks at $100,000, leaving you with $3,000 of drawdown room before reaching your limit.
Trailing Drawdown Calculation Summary
Scenario | Calculation | Result |
Initial Drawdown | $100,000 × 5% = $5,000 | Threshold = $95,000 |
New High ($103K) | $103,000 × 5% = $5,150 | Threshold = $97,850 |
Locked Drawdown | Highest balance = $110K, but initial = $100K | Threshold stays at $100K |
Withdrawal Risk | $108K – $8K = $100K | No buffer → Breach risk! |
💡if withdraw only $5000 | $108k - $5k = $103k | Still $3k room of drawdown for next trading |