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How can I calculate the Daily Drawdown?
How can I calculate the Daily Drawdown?
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For traders participating in the Evaluation, Express, and Stellar 2-Step challenges, a daily drawdown of up to 5%, 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.

You can use the following formula to simply calculate your drawdown limit for the day: Daily loss limit = (Your initial balance *Daily Loss Limit Percentage of your enrolled challenge)

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. So, 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)

You have a Stellar 2-Step challenge $100,000 account, on noon GMT+3 server time you have made $102,100, so your daily drawdown for that day will be ($100,000 * 0.05+ $2100) = $7100. In other words, if you lose more than $7100 on Closed or Running trades on that day, you will violate the daily drawdown limitation. Another thing to keep in mind is that your daily loss limit will be reset at midnight according to the server time.

Let's consider an example to illustrate this calculation. Suppose you have purchased an Evaluation 100K account. Here's how the calculation works:

Case 01:

For example, if you have a $100,000 account, 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 and commission rates are included in this calculation. It will be considered a violation if you lose more than $2,000.

Case 02:

Similarly, let's say you gained $5,000 in profit in a single day. In such case, you will be allowed to lose $5,000 (your profit) + $5,000 (your daily loss limit) = $10,000. Losing more than $10,000 (in both open and closed positions) will be considered a violation.

Case 03:

Let's look at another case: You have a $100,000 trading account. In a single day, you encounter a significant loss, which is around $3,000. Determined to be profitable, you initiate another trade. At any given moment, the position shows a floating loss of -$2,100. You will breach the daily loss limit as you have crossed $5,000 for a single day.

The rule of Daily Loss Limit implies that if your trades (even floating loss ) exceed -$5,000 within any trading day, it's 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 trade is currently running 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 $6000, which is more than your daily loss limit of $5000.

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