The maximum drawdown is the total amount your account is allowed to lose from its peak balance over the life of the challenge. It's a key risk management rule designed to limit overall losses.
- For the 1-Step Challenge, the maximum drawdown is 8%.
- For the 2-Step Challenge, the maximum drawdown is 8%.
Example on a $100,000 Account:
1-Step Challenge (8% Max Drawdown):
- You can lose up to $8,000 from your highest account balance.
- If your balance climbs to $105,000, your new minimum allowed balance becomes $97,000.
- Dropping below that would breach the drawdown rule.
Important: The maximum drawdown usually trails the highest balance you reach (also called a trailing drawdown), until it locks in at the starting balance. Always refer to the specific challenge rules to confirm how the drawdown is calculated.