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FAQ ❯ General ❯ Trading ❯ What is Max Drawdown trailing on Highest Balance (Futures Classic)?

What is Max Drawdown trailing on Highest Balance (Futures Classic)?

When a Futures Classic Challenge or Scaling Plan specifies that the Max Drawdown is trailing on the Highest Balance, it means that your Max Drawdown Limit adjusts upward each time your Current Balance (realized P&L from closed trades) reaches a new peak — also known as a High Watermark.

Example:

John purchases a Challenge with:

  • Starting Balance: $100,000

  • Max Drawdown: 10% (trailing on Highest Balance)

  • Initial Max Drawdown Limit: $90,000

On Day 3, John's balance (closed P&L only) peaks at $102,000.
His new Max Drawdown limit is updated to $92,000.

Later, if John's balance reaches a new all-time high of $104,000, his Max Drawdown limit will trail again and move up to $94,000.

 

* Current Equity: Unrealized P&L (Open Trades)

* Current Balance: Realized P&L (Closed Trades)