What is the Maximum Trailing Drawdown Limit?

The Maximum Trailing Drawdown is the amount your account’s equity or balance can’t go below. It is set at 5% of the initial balance. This 5% trails the High Water Mark until the trader reaches 5% profits in the account. Once they have achieved 5% profit in the account the max trailing locks in at the starting balance, and no longer trails the account.

Example 1: If you start with a $100,000 account balance your max trailing drawdown will be at 5% ($5,000). This means that your account should not go below $95,000 in equity at any given time.

Example 2:  Starting Balance= $100,000

If your account balance reaches $102,000(High Water Mark), your max trailing drawdown will be at $97,000 ($102,000-5% of Initial Balance:$5,000). This means your account should never go below $97,000 in equity or balance at any given time.
However, let’s say you close a trade with $1,000 loss and your account balance reaches $101,000, your max trailing drawdown will still be at $97,000 (High Water Mark:$102,000-5% of Initial Balance:$5,000). This means your account should never go below $97,000 in equity or balance at any given time.

Example 3:  Starting Balance= $100,000

If your account balance reaches anything above $105,000 i.e. there is growth of 5% in the account, your max trailing drawdown will be locked in at $100,000. This means your account should never go below $100,000 in equity or balance at any given time.