We use two types of drawdowns: static drawdown and trailing drawdown.
Static Drawdown
The Static Drawdown is used in our Ascended (2-Step) and Astral (3-Step) challenge programs. It is a fixed loss limit - meaning it does not change, no matter how your account performs.
This drawdown is calculated as a percentage of your starting account balance and once it’s reached, the account is automatically closed.
Example
Suppose you start with a $100,000 account and your maximum static drawdown is 8%:
Your maximum allowable loss is therefore $8,000.
If your account balance or equity drops below $92,000, it will be considered a violation of this rule.
Because the limit is fixed, it does not move up with profits - it always references your starting balance. This is different from Trailing Drawdown, which adjusts dynamically with your equity.
Why We Use It
The static drawdown is designed to encourage consistent risk management. It ensures that traders can demonstrate responsible trading habits without exceeding a fixed risk limit, regardless of temporary gains or losses.
Maintaining your account above the static drawdown limit helps protect both your challenge progress and the integrity of the funding program.
Trailing Drawdown
The Trailing Drawdown is an important part of both our Thunderbolt (1-Step) and Vanguard (Instant Funding) challenge programs. It’s designed to help measure real-time risk management, just like in professional trading environments.
The trailing drawdown adjusts dynamically based on your highest account equity - also known as your High-Water Mark. This High-Water Mark represents the peak value your account has reached (including open trades) and determines where your drawdown limit is set.
Example
Let’s say you start with a $100,000 demo account:
Your daily drawdown limit is 4% ($96,000).
Your maximum trailing drawdown is 6% ($94,000).
If your equity increases to $103,000 because of $3,000 in open profit, your daily drawdown remains $96,000 - but your trailing drawdown moves up to $96,820 ($103,000 − 6%).
Since this limit is based on equity, not only on closed trades, it trails behind your best equity level in real time.
If your equity later falls below $96,820, the account would be breached.
When Does the Trailing Stop “Trailing”?
Once your account grows by 6% (e.g., your balance reaches $106,000), the trailing drawdown locks at your starting balance ($100,000). From that point onward, it no longer follows your equity - it stays fixed, allowing you to build profits freely.
Why We Use It
This model helps simulate real risk control standards used by professional trading firms. It encourages consistent risk management and prevents large equity swings that could expose the account to unnecessary risk.
Both the Static Drawdown and Trailing Drawdown are designed to promote disciplined trading and responsible risk management, ensuring fairness and consistency across all challenge programs.
How Withdrawals Affect the Trailing Drawdown
It is crucial to understand that withdrawing profits does not reset your trailing drawdown limit or the High-Water Mark. The drawdown level remains fixed at the highest point it has reached.
Scenario 1: Withdrawing Before the Drawdown Locks
If your drawdown has not yet locked at your initial balance, the breach level will remain tied to your highest achieved equity, even after a withdrawal.
Example: On a $100,000 account, you make $4,000 in profit, bringing your equity's High-Water Mark to $104,000.
Your trailing drawdown limit is now set at $97,760 ($104,000 - 6%).
You decide to withdraw the full $4,000 profit, returning your balance to $100,000.
Result: Your drawdown limit does not change and remains at $97,760. This leaves you with only $2,240 ($100,000 - $97,760) of available drawdown, not the original $6,000.
Scenario 2: Withdrawing After the Drawdown Locks
Once your profit target (e.g., 6%) is reached, the trailing drawdown locks at your initial account balance.
Example: On a $100,000 account, you make $8,000 in profit, bringing your balance to $108,000.
Since your profit (8%) is greater than the 6% requirement, your trailing drawdown locks permanently at your initial balance of $100,000.
You decide to withdraw your entire $8,000 profit.
Result: Your account balance becomes $100,000. Because your drawdown limit is also locked at $100,000, your account will be immediately breached. To avoid this, you must leave a portion of your profits in the account to act as a drawdown buffer