Daily Drawdown Policy
The Daily Drawdown is a risk management mechanism applied to your simulated trading account. It is calculated as 5% of the account's starting balance or the "scaled" balance (post-payout balance). This value is reassessed daily to determine the stop-out level for the trading day.
Calculation Details
Initial Calculation:
The Daily Drawdown is set at 5% of the account's starting balance or the scaled balance after a payout.
Daily Recalculation:
At each market rollover (01:00 AM UTC), the Daily Drawdown is recalculated.
The calculation is based on the higher value between:
The account’s equity at 01:00 AM UTC.
The account’s balance at 01:00 AM UTC.
The Daily Drawdown is 5% of this higher value, which sets the daily stop-out level.
Example
Scenario:
At 01:00 AM UTC, your simulated account has:
Equity: $103,000
Balance: $100,000
The higher value is $103,000.
The Daily Drawdown is calculated as 5% of $103,000, which equals $5,150.
The daily stop-out level is set at $103,000 - $5,150 = $97,850 (rounded to $98,000 for simplicity).
Next Rollover:
At the next market rollover (01:00 AM UTC), the account’s equity and balance are reassessed to determine the new Daily Drawdown limit for the following trading day.
Key Notes
The Daily Drawdown ensures risk is managed dynamically based on the account’s performance.
The stop-out level is reset daily at 01:00 AM UTC, reflecting the most current equity or balance.