How does the maximum drawdown work?
The maximum drawdown is adjusted daily after the New York close (EOD, approx. 5:15 PM EST). If your equity falls below this limit, the account will be closed.
The maximum drawdown trails your account balance until the initial balance of $10,000, $50,000, $100,000, or $200,000 is reached. Once this level is reached, the drawdown remains fixed permanently.
In Funding, the drawdown is adjusted to the starting balance after a Performance Reward payout and remains fixed at that level permanently.
Phase 1: Before the limit freezes
Drawdown is trailing first.
The drawdown amount stays fixed: 6% of starting balance
The drawdown limit sits 6% below your highest end-of-day equity
The limit only moves up
The limit never moves down
Example: 100K account
Starting balance: $100,000
Max drawdown (6%): $6,000
Initial drawdown limit: $94,000
Day 1 (profit)
End-of-day equity: $102,000
New drawdown limit: $96,000 ($102,000 − $6,000)
Day 2 (loss)
End-of-day equity: $100,500
Drawdown limit stays at $96,000
It is not adjusted downward.
Day 3 (profit)
End-of-day equity: $103,000
New drawdown limit: $97,000 ($103,000 − $6,000)
Phase 2: After the first performance reward
The first payout is capped at $1,500.
After that, the drawdown limit is moved to the starting balance and freezes there.
From that point:
Drawdown limit = starting balance
On a 100K account it stays at $100,000 permanently
The buffer is no longer 6% below current balance
Available buffer = current equity minus starting balance
That is simply the profit still left on the account after the payout
If equity falls to or below starting balance, the account is closed.
Example: 100K account after the first payout
Equity before the payout is $103,000.
You withdraw the maximum first payout of $1,500.
Equity after payout: $101,500
Drawdown limit: $100,000 (frozen at starting balance)
Available buffer: $1,500
Not $6,000. Not 6% of $101,500.
If equity later rises to $106,000 with no further payout:
The limit stays at $100,000
Available buffer: $6,000
After the first payout, the limit no longer trails upward.
Quick comparison
| Before the first payout | After the first payout |
Drawdown amount | 6% of starting balance | only the remaining profit |
Drawdown limit | highest EOD equity minus 6% | fixed at starting balance |
Limit moves up | yes | no |
Limit moves down | never | never |
First payout | not taken yet | maximum $1,500 |
Account closes when | EOD equity is below the trailing limit | EOD equity is at or below starting balance |
Common mistakes
Wrong: “My drawdown is always 6% below my current balance.”
Right: That only applies before the limit is frozen, and only against the highest end-of-day equity.
Wrong: Drawdown and drawdown limit are the same thing.
Right: Drawdown is the distance. The limit is the equity level at which the account ends.
Wrong: After the first payout I have $6,000 of room again because this is a 100K account.
Right: After the payout you only have as much room as the profit left on the account.
Wrong: The Challenge works differently.
Right: The drawdown logic is the same in Challenge and Funded. A payout and the freeze to starting balance happen once the first withdrawal is made.
The limits in your dashboard always take priority. Percentages and account sizes can differ by product line (Crypto/CFD or Futures).