Max trailing drawdown refers to the maximum loss your account can suffer overall during the course of the Challenge you are undertaking. As you can see, this is a trailing drawdown, which means each time your current equity/ balance reaches a new peak, your drawdown limit will also trail and rise with it.
Important definitions:
Current equity = current balance + /- profits or losses from active (open) trades
Current Balance = balance +/- profits or losses from closed trades
The current balance and current equity will be the same if you do not have any open trades.
For example:
John purchases a Futures Executive Challenge which has a trailing drawdown based on Open trades.Starting with $150,000 in current balance & current equity, your max trailing drawdown is set to $146,500 as we provide you a maximum loss limit of $3500.
This essentially means your account cannot drop below $146,500 at any point throughout the challenge, otherwise, it will be considered a breach of our rules, and your account will be automatically closed.
If John was to open a position and reached a $2000 in unrealized profit, but then closes the position at only $1000 profit, then our system would record the highest point his account had reached, which in our case would be $152,000 (equity). Keep in mind even though he closed his position at a $151,000 balance since the Futures Executive Challenge is based on Open Trades, the system registers the highest equity your account has reached and is called your High Watermark.
If John had purchased the VIP Challenge which is based on Closed trades and has a maximum loss limit of $5000, then in the same above scenario our system would register his high watermark as the current balance at $151,000, where he closed his position and took the $1000 profit. Thus, $151,000 minus our maximum loss limit of $5000 for the VIP Challenge, would set his max trailing drawdown at $146,000.
All the above information is available in detail on your Dashboard.