Maximum Daily Draw Down
This rule is also known as trader daily stop-lose. According to our rules, this is set as 5% of the starting or initial balance. This rule states that, any moment of the day from the open of Sydney Session to the closing of New York session. All the result of closed positions in sum with the current open floating P/L (profit and loss) must not hit the determine daily limit.
Example for a 10k account:
With the initial account balance of 10k, your daily loss limit is $500 (5%DD). If you happen to loss $400 in your closed trades, your account must not decline more than $100 this day. It must also not go -$100 in open floating losses, the limit includes swaps and commissions.
Daily Profit Booster
Vice Versa: If you happen to gain profit of $500 in a day, then you can afford to lose 2x of $500 because your daily loss limit is $500 (5%DD) and you made an additional $500 making a total of $1,000, but you cannot lose more than that, once again, be reminded that your maximum daily loss count on your open positions/trades. For example; if you close trade with a lost of $400(DD) and you open a new trade that goes into -$110 loss(DD) and the trade goes back to profit at the end. Unfortunately, it is already too late, you have lost your account.
Be careful as maximum daily lost reset at Closing of New York session, for instance one day you had a profit of $200, on the same day you have an open position with a current floating loss of $500(DD) on this day, the maximum daily loss is not violated. Because the current daily loss is $300 (daily set limit $500, you had profit of $200 making a total of $700, now open position with -$500 loss(DD), because you have a booster of $200 profit) however, if you hold this open position with floating loss of $500(DD) after closing of New York session, you have violated. This is because your previous day profit does not count to a new day and the open of $500 exceed the maximum daily loss.
The size of Maximum daily loss limit give the trader enough space and its guaranteed a clearly defined daily risk to the investor, both the trader and the investor benefit from this rules as the account value will not drop below the limit and help traders stay discipline. Read the policies of this trading objectives in the policies section…..
WATCH THIS VIDEO TO LEARN MORE:
Maximum loss limit
This rule can also be called an account stop-loss. The equity of the trading account must not at any moment during the account duration declined below 90% of the initial balance. Example with a balance of $100,000, it means that the account lowest possible equity can be $90,000. Again, this is a sum of both closed and open position (account equity not balance) the logic of the calculation is the same as the daily loss limit. The only different is that it is not limited to one day but the entire duration of the trading period. The limit includes swaps and commissions. 10% of the initial account balance gives the trader enough space to proof that their account is suitable for the investment. It is a buffer that should keep the trader in the game even if there were some initial loses, the investor has an assurance that the traded account will not decline below 90% of it value under any circumstances or challenges. TO BE CONTINUED !!!