Understanding our drawdown Challenge Parameters:
One-Phase Challenges:
Daily Drawdown:> 3%
Total Drawdown:> 8%
Two-Step Challenges:
Daily Drawdown:> 5%
Total Drawdown:> 8%
Please note the daily drawdown is dynamic and adjusts relative to your account’s performance, while the total drawdown is static and firmly set based on your initial balance.
Breaching either the daily or total drawdown limits constitutes a hard rule violation, leading to immediate account closure with no possibility of reinstatement. This ensures strict compliance and responsible trading practices.
Static Drawdown Example with a $100,000 Balance
Imagine you start a Two-Phase Challenge with an initial trading balance of $100,000.
Daily Drawdown: In this challenge, your daily drawdown limit is 5%. For a $100,000 account, this means your daily drawdown limit is set at $95,000. You cannot lose more than $5,000 (5% of $100,000) in a single trading day. If your account balance decreases by $5,000 or more in a single trading day, you would reach the daily drawdown limit for that day.
Total Drawdown: Now, the total drawdown limit for this challenge is 8%, based on your initial balance of $100,000. This implies that you cannot incur losses exceeding 8% of your starting balance throughout the entire challenge. Your total drawdown limit is fixed at $8,000 (8% of $100,000). This limit ensures that you won’t lose more than $8,000 in total during the entire challenge period, irrespective of how your account balance fluctuates.
Profit Consideration: It’s crucial to understand that if you initially make a profit, for example, increasing your balance to $105,000, and then experience losses that bring your balance back to $100,000, these losses will count toward the daily dynamic drawdown limit. The total static drawdown limit is set at $90,000, ensuring the account maintains stability. Profits earned are subject to the dynamic daily drawdown limit, which adjusts based on the higher of the closing balance or equity.
Breaches can occur due to various reasons, such as the equity falling below the daily threshold or entering positions that surpass the total limits. In the case of static accounts, calculations consider the highest end-of-day balance or equity for determining daily drawdown limit.
Breaching drawdown limits or other trading rules results in permanent account failure. The account will be closed immediately. Additionally, violations such as IP sharing or engaging in prohibited trading strategies like one-sided betting will lead to restrictions, closures, or additional penalties. Please ensure compliance to maintain your account safely. For more details on specific rules and penalties, please refer to the Fundedelite policy documents or contact the support team.