The Maximum Loss rule for the 1-Step AEON Classic Account is designed to enforce disciplined risk management, safeguarding both traders and the firm’s capital. It establishes a 10% limit on the maximum loss an account can sustain, with a mechanism that adjusts based on whether a 10% profit threshold has been reached.
What does this mean?
The Maximum Loss is capped at 10% of either the account’s high watermark (highest equity achieved) or, once a 10% 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 10% profit:
The Maximum Loss trails the high watermark (highest equity). The stop-out level is set by subtracting 10% of the high watermark from that value. This updates whenever equity hits a new high.After reaching 10% profit:
Once equity reaches 10% above the initial balance, the stop-out level locks to the initial balance minus 10%. 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 10% profit threshold ($55,000). High watermark = $54,000.
Maximum Loss: 10% of $54,000 = $5,400.
Stop-out level: $54,000 - $5,400 = $48,600 (rounded to $48,600 for simplicity).$50K Account with $6,000 profit, then grows to $60,000 after hitting 10% profit:
Once equity hits $55,000 (10% profit), the stop-out locks to $50,000 - 10% of $50,000 = $45,000.
At $60,000 equity, the stop-out remains $45,000, allowing a $60,000 - $45,000 = $15,000 loss before a breach.$50K Account with no profit, equity at $49,000:
High watermark = $50,000 (initial balance).
Maximum Loss: 10% of $50,000 = $5,000.
Stop-out level: $50,000 - $5,000 = $45,000.
The Maximum Loss is monitored continuously, ensuring your account remains active as long as equity stays above the stop-out level.