The daily drawdown (loss) limit is an important rule that applies to all phases of trading at MVFunded. It establishes a maximum threshold for the equity decrease within a single trading day.
Definition and Calculation:
The daily drawdown limit is set at 5% for 2-Step Challenges. It means that at any moment during the trading day (EE(S)T – Eastern European Summer Time), the decrease in equity should not exceed this predetermined limit. To calculate the current daily loss, you subtract the current equity from the balance at the start of the day using the formula: Current daily loss = balance at the start of the day - current equity.
Example 1:
With a $100,000 account, and your starting balance for the day is also $100,000. In this case, your maximum daily loss value would be 5% of $100,000, which is $5,000. It means that your equity should not decrease by more than $5,000 in a single trading day to comply with the daily drawdown limit.
Example 2:
Let's say you have accumulated a profit of $9,000, and your current balance stands at $109,000. To calculate your daily loss, you apply the formula mentioned earlier: $109,000 - 5% = $5,450. This new daily loss level becomes $103,550. The 5% drawdown limit is always calculated based on your daily starting balance.
Please note that Equity loss factors in the monetary loss from open positions including the spreads.
Trading conditions in the markets are dictated by our Liquidity providers and subject to change based on market conditions