The Maximum End of Day (EOD) Trailing Drawdown is a dynamic risk management tool designed to protect your profits by adjusting your loss limit only at the close of each trading day. This mechanism locks in gains based on your highest end-of-day balance, offering flexibility to trade during the day without worrying about real-time adjustments to the drawdown.
How It Works:
- The EOD Trailing Drawdown is recalculated at the end of each trading day. If your account balance at the close of the day exceeds any previous end-of-day high, the drawdown adjusts upwards to reflect this.
- The drawdown does not decrease intraday, meaning it stays fixed throughout the day even if your balance drops. It only moves up when a new end-of-day high is reached.
- If a trader successfully completes the 5 minimum profitable trading days before reaching the required profit percentage to adjust the drawdown, the drawdown will still lock at the initial balance, but only after the first payout request.
- Additionally, the trailing EOD drawdown will stop and lock at the initial balance of the challenge after either reaching the maximum drawdown percentage in profits or after the first payout request.
Example:
- For a $50K account with a 6% trailing drawdown:
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- If your account balance reaches $52,300 by the end of the day, the drawdown locks at $50,000, preserving your gains and protecting against further losses.
- For a $100K account with a 3% trailing drawdown:
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- If your balance reaches $103,300, the drawdown locks at $100,000. Even if your balance decreases the next day, the drawdown stays locked at $100,000 until a new high is reached.
Why is the Maximum EOD Trailing Drawdown Important?
- Locks in Profits: This mechanism locks in your highest end-of-day balance, preserving your profits and minimizing potential losses.
- No Intraday Adjustments: The drawdown only adjusts at the end of the trading day, giving you the freedom to trade without intraday restrictions.
- Encourages Long-Term Growth: By focusing on daily performance, this rule promotes steady growth and consistent risk management.
What Happens If You Hit the Maximum EOD Trailing Drawdown?
If your account balance drops below the locked EOD drawdown by the end of the trading day, your positions will be liquidated, and trading will stop for that phase. To resume trading, you will need to reset the account or start a new challenge.
This rule applies to both Evaluation Accounts and Instant Funded Accounts, ensuring that traders have the opportunity to lock in profits while managing their risk effectively.