This represents the maximum allowable loss before the account is considered breached and permanently closed. These limits apply across both evaluation and funded stages, unless stated otherwise.
Below you'll find how drawdown works per challenge type, how it's calculated, and what happens if it's exceeded.
Maximum Drawdown by Model
Challenge Type | Max Drawdown | Breach Level (on $100,000) |
2 Step | 8% | $92,000 |
Pass Then Pay(Evaluation) | 7%(Trailing) | $93,000 |
Pass Then Pay (Funded) | 7%(Trailing) | $93,000 |
1 Step | 6% (Trailing) | $94,000 |
Instant Funded | 6% (Trailing) | $94,000 |
How Is Maximum Drawdown Calculated?
📌 Static Drawdown
Most challenges use static drawdown, meaning your drawdown limit is fixed from your starting balance and doesn’t trail upward as your balance increases.
Example — 2 Step Challenge:
Starting Balance: $100,000
Max Drawdown: 8%
Breach Level: $92,000
→ Account is breached if your equity drops below $92,000, regardless of profit made.
📌 Trailing Drawdown
The 1-Step, instant funding and pay-then-pass Challenge uses a trailing drawdown. The drawdown follows your highest account balance until it reaches your initial starting balance, where it permanently locks.
Example
Let's say you purchase a $100,000 account.
Starting Balance: $100,000
Maximum Drawdown: 6%
Initial Drawdown Threshold: $94,000
This means if your account equity falls to $94,000, your account will be breached.
As You Make Profits
Suppose your account grows:
Account Balance | Maximum Drawdown Threshold |
$100,000 | $94,000 |
$101,000 | $95,000 |
$103,000 | $97,000 |
$105,000 | $99,000 |
$106,000 | $100,000 (Locks Here) |
Once your account reaches $106,000, the trailing drawdown reaches your initial balance of $100,000 and stops trailing permanently.
From that point onward, your maximum drawdown will always remain at $100,000, even if your account continues to grow.
For example:
Account grows to $110,000 → Drawdown remains $100,000
Account grows to $120,000 → Drawdown remains $100,000
After a Payout
If your trailing drawdown has already locked at your initial balance and you request a payout, the drawdown remains at the initial balance.
For example:
Highest balance reached: $110,000
Drawdown locked at: $100,000
You withdraw $5,000
New account balance: $105,000
Your maximum drawdown threshold remains $100,000.
This means you now have a $5,000 buffer before reaching the maximum drawdown limit.
What Happens If You Breach the Drawdown Limit?
Evaluation Accounts: The account will be closed and considered failed. You’ll need to purchase a new challenge to continue.
Funded Accounts: Your funded account will be closed permanently and any outstanding profit will be forfeited. You're welcome to purchase a new challenge to start again.
Breaching does not result in being banned — it simply ends the current account.
Staying Within Drawdown Limits
To manage drawdown effectively:
Use stop-loss orders on all trades.
Monitor both balance and equity, especially after large swings.
Avoid oversized trades, particularly during high-impact news events.
Keep risk consistent and conservative across your strategy.
