Max Trailing Drawdown refers to the maximum loss your demo 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 high-watermark, your drawdown limit will also trail and rise with it.
Important Definitions:
Current Equity = Your balance including open/ongoing trades
Current Balance = Your balance of closed trades. Any P&L from ongoing trades is not included.
The current balance and current equity will be the same if you do not have any open trades.
For example:
John purchases a Futures Prime Challenge which has a Max Trailing Drawdown based on closed trades (End-of-Day Balance). Starting with $150,000 in Current Balance, his Max Trailing Drawdown is set to $145,500 as we provide a maximum loss limit of $4,500 (this is also visible on his Dashboard).
This essentially means his demo account cannot drop below $145,500 at any point throughout the challenge, otherwise, it will be considered a breach of our rules, and his demo account will be automatically closed.
If John was to enter a position which reaches a $2,000 in realized profit, then our system would record the high-watermark at $152,000 (balance).
If John had purchased a Challenge which is based on open trades and had for example a maximum loss limit of $5,000, then in the same above scenario our system would register his High Watermark as the Current Equity at $152,000. Thus, $152,000 minus our maximum loss limit of $5,000 for that Challenge, would set his Max Trailing Drawdown at $147,000.
All the above information is available in detail on your Dashboard.
Important Note:
If your equity drops below your Drawdown limit, your account is considered breached and immediately disabled.
A notification is then sent to your dashboard to close the open positions that took you into negative equity and also close the account. This action usually takes up to 30 seconds.
In the process of those 30 seconds, if there is positive movement of your open position, you may see that your account was breached, but your equity is above the Drawdown limit. Although we understand this may cause confusion, due to the markets being volatile, we are unable to breach accounts in real-time, but rest assured no account is ever breached unless the equity drops below the Drawdown limit.
If you have any concerns regarding this, feel free to go through your trades to confirm.