Tanya Jawab

When a Challenge or Scaling plan mentions that its Max Drawdown is trailing on its Highest Equity, this means that each time your *Current Equity (open P&L) reaches a new peak (High WaterMark), then your Max Drawdown Limit will also trail with it.

Example:

John purchased a Challenge which has $100,000 starting balance and a Max Drawdown of 10% (trailing on Highest equity), meaning his Max Drawdown limit is set at $90,000.

On Day 3 of his Challenge, his equity (open P&L) peaks at $102,000 but then closes trades at a balance of $101,000. This means his new Max Drawdown limit will be set to $92,000.

If at any time John reaches a new all-time high in equity, of $104,000 for example, then his Max Drawdown limit will trail again up to $94,000.

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

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