What is 'drawdown' and how is it calculated?

1 min. readlast update: 02.14.2024

The equity stop-out level (aka drawdown) is the lowest value of the account allowed. Once the account equity value is below this level, the fund will close all running trades, and disable trading and access. The drawdown measures as absolute drawdown and is 6% of the initial balance for all programs at all levels. No matter how much the trader profits in the account, the maximum loss (drawdown) allowance increases. The trader can always choose to keep profits in the account in order to increase the maximum drawdown amount. Any payouts requested will reduce the account balance, hence reducing the maximum drawdown.

Example: If the initial balance is $10,000 and the maximum drawdown is $600 then the account will be closed below the equity level of $9,400, Let’s say your account goes up to $10,300, the maximum drawdown is now $900.

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