For traders participating in the Evaluation, Express, and Stellar 2-Step Challenges, a daily drawdown of up to 5% is permitted, and for the Stellar Lite Challenge, a daily drawdown of up to 4% of their initial account balance is permitted. However, for traders enrolled in the Stellar 1-Step Challenge, the allowable daily drawdown is limited to 3% of their initial account balance.
To calculate your daily drawdown limit, use the following formula:
Daily Loss Limit = Initial Balance × Daily Loss Limit Percentage of Your Enrolled Challenge Account
When calculating the daily drawdown, please note that swap charges, commissions, and fees are included in the total amount. If you exceed the daily drawdown limit, your account will be “Paused” and marked with a "Daily Loss Limit," and you will no longer be able to trade.
Example 1: You have a Stellar 2-Step Challenge $100,000 Account, and your Daily Loss Limit is 5% of your initial balance. So, $100,000 is considered as the initial balance. Then, your Daily Drawdown will be ($100,000 * 0.05) = $5000
Example 2: Let’s say you are in profit at a certain time in the day, You can calculate your Drawdown Limit for the day: (Your initial balance × 0.05 + Profit amount in that day)
You have a Stellar 2-Step Challenge $100,000 Account, at noon GMT+2 server time, you have made $2,000 profit, so your Daily Drawdown for that day will be ($100,000 * 0.05+ $2000) = $7000. In other words, losing more than $7,000 on Closed or Running trades on that day will violate the Daily Drawdown Limitation.
Please keep in mind that your Daily Loss Limit will reset at midnight according to the server time. Therefore, your new daily drawdown for the following day will be calculated as the Initial Balance (in this case, $100,000) multiplied by the Daily Loss Limit Percentage of your enrolled challenge (5%) which is $5,000.
Let's consider an example to illustrate this calculation. Suppose you have purchased an Evaluation $100,000 account. Here's how the calculation works:
Case 01:
As per the challenge model, the maximum Daily Loss Limit is $5,000, and you are not allowed to lose more than $5,000 on any given day. Suppose you have lost a total of $3000 in your closed trades. In such a case, you cannot lose more than $2000, including floating losses. Note that Swap, commission rates, and fees are included in this calculation. It will be considered a violation if you lose more than $2,000 on that day.
Case 02:
Similarly, let's say you gained $5,000 in profit in a single day. In such a case, you will be allowed to lose $5,000 (your profit) + $5,000 (your Daily Loss Limit) = $10,000 for that day. Losing more than $10,000 (in both open and closed positions) will be considered a violation. Note that, your Daily Loss Limit will reset at midnight according to the server time. So, the gained profit of previous days will not count forward and your daily drawdown will again be the Initial Balance (in this case, $100,000) multiplied by the Daily Loss Limit Percentage of your enrolled challenge (For example: 5%).
So, if you started with $110,000 on a new day and you lost $5000, although your account equity is $105,000, you will breach your account cause: $100,000 (Initial balance) × 5% (Daily Loss Limit Percentage)= $5000 is your daily loss limit. It is not required to have equity dropped to $95,000. As long as you exceed the $5000 loss limit on that day your account will be paused due to the daily loss limit being breached.
Case 03:
Let's look at another case: You have a $100,000 trading account. In a single day, you encounter a significant loss of around $3,000. Determined to be profitable, you initiate another trade. At any given moment, if the running position exceeds the floating loss of -$2,000. Your account will breach the daily loss limit as you have crossed $5,000 for a single day and your account will be paused.
The rule of the Daily Loss Limit implies that if your trades (even floating losses) exceed -$5,000 within any trading day, you're violating the rule. Therefore, regardless of the outcome of your last trade, hitting the $5,000 loss threshold ends your trading journey.
Case 04:
Another thing to keep in mind is that your daily loss limit will be reset at midnight according to the server time. For example, suppose you have gained a $2000 profit in a closed trade, and currently, you have a running trade at a $6,000 floating loss. In this case, you still have not violated your Daily Drawdown for the day because your current daily loss is +$2000 - $6000 = -$4000. However, if you hold this one trade with a floating loss of $6,000 after midnight, you will breach the Daily Loss Limit because a new day begins after midnight, and you have already lost $6,000, which is more than your calculated Daily Loss Limit of $5000.