The daily drawdown limit is an important rule that applies to all phases of trading at Seacrest Markets. The daily drawdown limit for simulated 2-Step accounts is 5%. This means that at any point during the trading day, if your total losses from closed trades and open positions exceed 5% of your starting daily balance, it's a violation of the daily drawdown limit. Remember that swap charges, commissions, and other fees are included in the total.
To calculate your daily loss limit, use this formula:
Daily Drawdown Limit = Starting Daily Balance × 0.05 (5%)
Keep in mind that the daily loss limit resets every day at 5:00 PM EST.
Here's a better explanation of how the daily drawdown limit works:
Example 1:
You have a $100,000 account, and that's your starting daily balance at 5:00 PM EST. 5% of $100,000 is $5,000, so your daily limit is $95,000. If your equity touches $95,000 or lower during the day, the account breaches for daily drawdown.
Example 2:
Your starting daily balance at 5:00 PM EST is $150,000. 5% of $150,000 is $7,500, so your daily limit is $142,500. If your equity hits $142,500 or below during the day, the account breaches for daily drawdown.
Example 3:
The daily loss limit resets at 5:00 PM EST every day, so it's based on your balance at that moment. For example, suppose you started with a $100,000 account (daily limit $95,000), made a $2,000 closed profit, but have an open trade with a $5,000 floating loss. Your balance is currently $102,000, equity $97,000. If you hold that open trade past 5:00 PM EST, the next day limit is 5% of $102,000 ($5,100), so at $96,900. As your equity is $97,000 because of open trade in a floating loss, that leaves you with just a $100 buffer before hitting the daily limit.
To read more about floating loss please check here: Floating Loss
The daily drawdown limit serves as a risk management measure, ensuring that traders control their equity decrease within a specified range during each trading day. By adhering to this rule, traders can protect their virtual capital and maintain a disciplined approach to managing losses.
You can always check your daily loss limit and reset counter in your dashboard for easy tracking.
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