Max Drawdown
Max Drawdown is the largest loss your account can take before it breaches. On an Instant Account, it trails on an intraday basis: the floor follows your highest equity point during the trading day, including open unrealised profit, not just your end of day balance. It trails upward only, never down, and once it reaches your starting balance it locks there permanently.
Account Size | Max Drawdown |
$25,000 | $1,250 |
$50,000 | $2,500 |
$100,000 | $4,000 |
$150,000 | $5,000 |
How it works
Let’s take an example of 50K account, as your equity climbs to new highs, the floor trails $2,500 behind your highest point. It only ever moves up, never down. Once the floor reaches your starting balance of $50,000, it locks there permanently and stops trailing.
The table below will make it further clear for you.
$50,000 (start) | $47,500 | Floor is $2,500 below |
$51,000 | $48,500 | Trails up |
$52,000 | $49,500 | Still trailing |
$52,500 | $50,000 | Floor locks here permanently |
$55,000 | $50,000 | Locked, no longer trails |
$60,000 | $50,000 | Still locked at $50,000 |
Before the lock, you always keep a $2,500 cushion beneath your highest equity point. After the lock, the floor is frozen at $50,000, so your cushion grows the higher your equity climbs: $5,000 of cushion at $55,000 equity, $10,000 at $60,000. But that cushion only exists while the profit stays in the account.
What happens when you withdraw
Withdrawing removes that cushion. Once the floor has locked at your starting balance, there is no cushion beneath it.
Say you grow the account to $55,000 and withdraw $5,000. Your balance returns to $50,000, which is exactly where the floor is locked. From that point, any drop in equity at all will breach the account.
Always leave a cushion in the account when you withdraw.
