The Max Drawdown defines the maximum loss an account can sustain before it is considered breached. This rule applies differently during the Evaluation (Challenge) stage and the Funded account stage.
In short: Evaluation accounts have a 6% trailing drawdown that locks at the starting balance. Funded accounts have a 5% trailing drawdown that locks at the starting balance on a 5% profit and after a payout.
Key differences between Evaluation and Funded
Feature | Evaluation | Funded |
Max Drawdown | 6% | 5% |
Type | Trailing | Trailing |
Trails based on | Highest balance (closed trades only) | Highest balance (closed trades only) |
Lock behavior | Locks at starting balance | Locks at starting balance on 5% profit and after a payout |
Resets | Unlimited free resets | Discounted fee (not available after an approved payout) |
How Evaluation drawdown works
The drawdown trails based on the highest balance (closed trades only).
The drawdown moves upward as profits increase.
The drawdown locks once it reaches the starting balance.
If balance or equity touches the drawdown level, the account is breached.
Example: Evaluation account
Situation | Drawdown level |
Starting balance $100,000, max drawdown 6% ($6,000) | $94,000 (initial breach level) |
Balance rises to $103,000 | $97,000 (if equity later drops to $97,000, the account is breached) |
Trailing reaches $100,000 | Locked at $100,000, no longer trails upward |
How Funded drawdown works
The drawdown trails as the account grows.
The drawdown trails based on the highest balance (closed trades only).
After a payout, the drawdown locks based on Lock Upon Payout (LUP) rules.
Both balance and equity are monitored.
If balance or equity reaches the drawdown level, the account is breached.
Example: Funded account
Situation | Drawdown level |
Starting balance $100,000, max drawdown 5% ($5,000) | $95,000 (initial breach level) |
Balance rises to $110,000 | Drawdown adjusts upward accordingly (if equity later drops to the drawdown level, the account is breached) |