Initial Balance Drawdown Policy (3-Step Classic)
The Initial Balance Drawdown is a strict, static risk rule that applies throughout both the challenge phases and the funded phase of the 3-Step Classic. Violating this rule results in immediate account termination.
Drawdown Limits
Challenge Phases (Phase 1, 2, & 3)
Static Drawdown: 8% of the initial balance.
Funded Phase
Static Drawdown: 10% of the initial balance.
These limits remain fixed and are always calculated from the starting balance — they do not trail and do not change based on profits.
How It Works
The Initial Balance Drawdown is based on:
Total losses (floating + closed)
Equity must not fall below the drawdown threshold
If equity reaches or drops below this limit, the account is permanently breached.
Examples
Challenge Phases (8% Static DD)
Initial Balance: $100,000
Drawdown Limit: 8% of $100,000 = $8,000
Minimum Equity Allowed: $92,000
If floating + closed losses exceed $8,000 and equity drops below $92,000, the account fails.
Balance Reset After Payout (Funded Phase)
After every payout:
The balance is reset to the initial balance (e.g., back to $100,000)
The drawdown limit is recalculated from the initial balance, regardless of profits earned before the payout
Example:
Funded account initial balance: $100,000
Payout approved → balance resets to $100,000
Maximum Drawdown remains fixed at 8% = $8,000
Equity falling below $92,000 results in termination
Key Notes
The drawdown is static, not trailing.
Limits are always calculated from the initial balance, never from peak equity.
The goal is disciplined risk management across all stages of the 3-Step Classic.