The maximum permissible loss from the starting balance or peak balance. Breaching the drawdown limit ends the evaluation or funded account.
Traders must be aware of how their drawdown is calculated (static or trailing). A trailing drawdown moves with profits, requiring more careful risk management, while a static drawdown remains fixed.
A trader starts with a $50,000 account and has a $2,500 trailing drawdown. If they grow the account to $53,000, their new drawdown limit rises to $50,500. If their balance then drops below $50,500, they lose the account.
The number of phases a trader must complete to qualify for a funded account. Each phase typically includes meeting profit targets while adhering to risk rules.
The initial amount of capital allocated to a trading account in an evaluation or funded account.
The specific profit amount a trader must achieve to pass an evaluation or progress to a higher account level.
The maximum amount a trader is allowed to lose in a single trading day. Exceeding this limit typically disqualifies the trader. There are different types of loss limits, so it is important to understand the type that applies to a chosen plan.
The profit cushion above the starting balance, which traders must maintain to stay compliant or qualify for payouts.