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., 3-6% of initial balance).
This restricts how much you can lose in a single day before violating rules.
💡How It Works
Max Drawdown (Balance Based) 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 | New Day Balance | 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 equity to $90K, 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 (Balance Based)
(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 | New Day Balance | Daily Drawdown Threshold | Rule Check |
Initial Capital | $100,000 | $95,000 | Safe |
Profit to $120K | $120,000 | $115,000 (Daily Buffer: 5% of Initial Capital) | Safe |
Loss to 112k | $116,000 | $111,000 (Daily Buffer: 5% of Initial Capital) | Safe |
Loss to $91K | $97,000 | $92,000 (Daily Buffer: 5% of Initial Capital) | 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
Your Max Drawdown is calculated based on your highest account balance. However, the threshold is strictly capped at your initial capital level and remains permanently fixed, meaning it does not adjust upward with profits from closed positions.
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.
Trailing Drawdown Calculation Example:
Scenario | New Day Balance | Drawdown Threshold | Locked at Initial? | Status |
Initial Capital | $100,000 | $95,000 | No | ✅ Active |
Profit to $110K | $110,000 | $100,000 | Yes ($100K cap) | 🔄 Updated |
Balance Drops to $105K | $110,000 | $100,000 | Yes ($100K cap) | 🔄 Updated |
Profit to $120K | $120,000 | $100,000 | Yes ($100K cap) | 🔄 Updated |
Balance Drops to $98K | $120,000 | $100,000 | ❌ Breached! | ⛔ Failed |
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 |
Locked Drawdown | Highest balance = $110K, but initial = $100K | Threshold stays at $100K |
Withdrawal Risk | $110K – $10K = $100K | No buffer → Breach risk! |
💡if withdraw only $5000 | $110k - $5k = $105k | Still $5k room of drawdown for next trading |