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 Challenge which has a Max Trailing Drawdown based on Open trades. Starting with $150,000 in Current Balance, your Max Trailing Drawdown is set to $146,500 as we provide you a maximum loss limit of $3500 (this is also visible on your Dashboard).
This essentially means your demo account cannot drop below $146,500 at any point throughout the challenge, otherwise, it will be considered a breach of our rules, and your demo account will be automatically closed.
If John was to enter a position which reaches a $2000 unrealized profit, but then closes the position at only $1000 profit, then our system would record the high-watermark, 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 particular Challenge is based on Open Trades, the system registers the highest equity your demo account has reached and is called your High Watermark.
If John had purchased a 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 that Challenge, would set his Max Trailing Drawdown at $146,000.
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.