Why does this rule exist?
The Max Position Loss rule ensures that your risk per market is strictly limited.
The Maximum Position Loss rule applies to each position and includes all costs, such as slippage, spread, and fees. Multiple positions in the same market are considered together.
Your maximum risk per market:
Challenge: 1% of account balance
Funding & Instant Funding: 0.5% of starting balance
Example (Evaluation)
Account: $50,000 → 1% risk = $500
It is recommended to build in a safety margin below the 1% limit to account for normal market fluctuations and trading costs.
Example (Funding)
Account: $50,000 → 0.5% risk = $250
It is recommended to set the risk well below the 0.5% threshold to account for slippage and fees.
What happens in case of a rule violation?
A violation results in a soft breach:
The position is automatically closed
The account remains active
Trading can continue immediately
A stop-loss does not guarantee a fixed execution price. Slippage and fees may cause the actual loss to exceed the limit.
After the 3rd violation, a hard breach occurs and the account is closed.
Market conditions such as high volatility or wide spreads increase the risk of triggering a rule violation.
Purpose of this rule
Prevents excessive concentration in a single asset
Avoids hidden over-leverage through multiple orders
Encourages clean and professional risk management
Reflects realistic trading conditions in live markets
Best Practices for Avoiding Rule Violations
Allow for a safety margin: Set your risk below the specified limit to account for slippage and fees.
Be mindful of market conditions: Avoid trading in volatile markets or during periods of wide spreads.
Regular Review: Monitor your positions and factor all costs into your risk management plan.
Frequently Asked Questions (FAQs)
Why doesn’t a stop-loss protect against a breach? A stop-loss does not guarantee a fixed execution price. Slippage and fees can increase the actual loss.
Are fees included in the calculation? Yes, all trading costs, such as fees and spreads, are included in the loss calculation.
Does the limit apply per account or per position? The limit is calculated per position, but multiple positions in the same market are aggregated.
Differences from Other Risk Rules
Daily Loss Limit vs. Max Position Loss: The Daily Loss Limit monitors the maximum daily loss, while the Max Position Loss rule limits the loss per position. Both rules operate independently of each other.