The Maximum Loss rule for the 1-Step AEON Classic Account is designed to enforce disciplined risk management, protecting both traders and the firm’s capital. It sets a 5% limit on the maximum loss an account can sustain, with a mechanism that adjusts based on whether a 5% profit threshold has been reached.
What does this mean?
The Maximum Loss is capped at 5% of either the account’s high watermark (highest equity achieved) or, once a 5% profit is reached, the initial balance. If the account’s equity falls below the stop-out level, it’s considered a hard breach, resulting in immediate account closure.
How is it calculated?
The calculation depends on the account’s profit stage:
Before reaching 5% profit:
The Maximum Loss trails the high watermark (highest equity). The stop-out level is set by subtracting 5% of the high watermark from that value. This updates whenever equity hits a new high.After reaching 5% profit:
Once equity reaches 5% above the initial balance, the stop-out level locks to the initial balance minus 5%. This remains fixed, even if equity grows further.The calculation includes closed trade profits/losses, open positions, swap fees, and commissions.
Examples:
$50K Account with $4,000 profit:
Equity is $54,000, below the 5% profit threshold ($52,500). High watermark = $54,000.
Maximum Loss: 5% of $54,000 = $2,700.
Stop-out level: $54,000 - $2,700 = $51,300 (rounded to $51,300 for simplicity).$50K Account with no profit, equity at $49,000:
High watermark = $50,000 (initial balance).
Maximum Loss: 5% of $50,000 = $2,500.
Stop-out level: $50,000 - $2,500 = $47,500.
The Maximum Loss is monitored continuously, ensuring your account remains active as long as equity stays above the stop-out level.