In our standard challenge, we use equity drawdown limits. This means your available drawdown for the day would be 5% of your balance at the start of the day (5pm EST). Please look at the examples below to ensure you fully understand this.

Example 1:
On a 100K Account, if at 5pm EST you have an open trade with a floating profit of $2,000, your account equity will be 102K. With a 5% daily drawdown, the equity cannot drop below $97,000 ($102,000 - $5,000 = $97,000) on the next trading day.

Example 2:
If on a 100K Account at 5pm EST you have an open trade with a floating loss of -$2,000, your account equity will be $98,000. Because your $100K balance is higher than your $98,000 equity, your daily drawdown limit of $5,000 will be calculated on a $100K balance. This means for the next trading day, the equity cannot drop below $95,000 ($100,000 - $5000 = $95,000).
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Example 3:
If there are no open trades at 5pm EST, the daily drawdown will be 5% of whatever the closed balance is.

Example 1:

Starting balance of the day: $100,000
Starting equity of the day: $100,000

Daily simulated drawdown limit: 5%

Maximum daily simulated loss: 5% of $100,000 = $5,000
Equity or balance cannot go below $95,000

Example 3:
Starting balance of the day: $103,500
Starting equity of the day: $101,000

Daily simulated drawdown limit: 5%

Maximum daily simulated loss: 5% of $103,500 = $5175
Equity or balance cannot go below $98,325

It's important to note that the daily simulated drawdown limit is calculated based on the starting account balance of the day (5PM EST).