Here are some examples of the Daily Drawdown Rule on a 2-Phase account. The Daily Drawdown Rule for 2-Phase accounts is 5%.
Example 1: Starting Balance is Higher than Starting Equity
Starting Balance: $100,000
⬇️ Open Trades in Loss: -$2,000
Starting Equity: $98,000 (lower than balance)
Daily drawdown is based on the higher value: $100,000.
5% of $100,000 = $5,000
Daily Loss Limit: $100,000 – $5,000 = $95,000
The calculation is based on starting balance because it’s higher. So your equity or balance must not go below $95,000 during that day or it will be a violation.
Example 2: Starting Equity is Higher than Starting Balance
Starting Balance: $100,000
⬆️ Open Trades in Profit: +$2,000
Starting Equity: $102,000 (higher than balance)
Daily drawdown is based on the higher value: $102,000.
5% of $102,000 = $5,100
Daily Loss Limit: $102,000 – $5,100 = $96,900
The calculation is based on starting equity because it’s higher. So your equity or balance must not go below $96,900 during that day or it will be a violation.