The Drawdown Rule
Drawdown rules are strict risk limits designed to protect traders and ensure disciplined trading in Funded Account Challenges. There are two types of drawdown you need to be aware of: Daily Drawdown and Maximum Drawdown.
Exceeding either one will result in account closure under both the Challenge and Funded Trader rules.
Daily Drawdown
Your equity cannot fall below a fixed percentage of your account balance at the start of the trading day.
The snapshot that resets the Daily Drawdown is taken at 5 PM EST each day.
While breaches are driven by your equity value, the calculation is always based on your account’s starting balance (at 5PM EST of the previous day), not on equity fluctuations.
Maximum Drawdown
The Maximum Drawdown (sometimes called Overall Drawdown) applies to the lifetime of your account.
Your equity cannot fall below a fixed percentage of your initial account balance.
Unlike Daily Drawdown, this does not reset — it remains fixed throughout the challenge.
⚠️ Important Note on Drawdown
The limit is calculated on balance, but equity triggers the breach. This keeps the rules consistent and prevents shifting risk limits during the day.
Quick Summary
Daily Drawdown: Calculated on starting balance at 5 PM EST. Equity cannot drop more than the Daily Drawdown Value (%).
Maximum Drawdown: Fixed percentage of initial balance for the lifetime of the account.
Breaching either rule = account closure.
For the exact Daily and Maximum Drawdown values that apply to your account type, always refer to your trader dashboard, where limits are automatically calculated and updated for you. You can also review the official rule details anytime on our Trading Rules page.