The Max Trailing Drawdown acts as a safety net for your 1-Step Account. Here's how it works:
Starting Off: When you begin trading, your account has a 7% trailing drawdown based on your starting balance.
Growing Your Account: As you grow your account and make gains, the drawdown moves up with your closing balance until you achieve a 7% gain overall.
Locking In: Once you reach a 7% gain, the drawdown locks at your starting balance and no longer trails with your account growth.
Example:
Let’s say you start with $100,000. With a 7% drawdown, your account would breach if the equity drops to $93,000. If your account grows to $105,000, your new drawdown level moves up to $98,000.
If you continue growing your account to $107,000, the drawdown locks in at your starting balance of $100,000. From this point on, no matter how much your account grows (even up to $170,000), you would only breach your account if your equity falls below $100,000.
However, be mindful of the 4% maximum daily loss rule as well.