How Does The Trailing Threshold Work? Master Course

You start with your initial balance and allowable contracts for the plan.

You can trade up to the maximum contracts. Micros can also be traded up to the max contract size for the plan.

The max loss drawdown varies for each plan. For example, on a 50k plan, it starts $2500 below 50k at $47,500.

There is no daily max drawdown limit.

For FULL accounts:

In a paid/funded account, the max drawdown stops trailing when the liquidation threshold is at $100 plus the initial plan balance (i.e. $50,100 on a 50K plan). Another way to look at it is when your peak unrealized account balance is initial plan balance plus trailing drawdown amount plus $100, the trailing will stop.

For the STATIC accounts:

The drawdown will remain the same as it is already static. E.g. 100k STATIC account, the drawdown will remain at $99,375 and will not change.

Below is the Max Drawdown for each contract size and plan.

You can see the rising trailing max drawdown in your RTrader dashboard under Auto Liquidate Threshold. It is important to monitor this value. If your account drops below the drawdown threshold, you will fail the evaluation.

If your risk allowed is, for example, $2,500, it will trail the highest live profit by $2,500.

See the following as an example:

1. Your starting balance is $50,000. Your threshold will be $47,500 ($2,500 below $50,000).
   
   
2. You make $500 and close the trade. Your balance will be $50,500 and your threshold will be $48,000 ($2,500 below $50,500).
   
   
3. Next, you enter a trade and get up to $52,000, but don't close the trade until your balance is at $51,000. Then, your threshold will be $49,500 ($2,500 behind the highest live value of $52,000).

So, as you can see, the drawdown threshold liquidation is not based on when you close the trade but is based on the highest balance of when you are in a trade.

This is important to keep in mind, especially if you are trailing trades, since when you give up profit on the trail, you still raise your trailing threshold.

(The following only applies to RITHMIC accounts)

During your evaluation, the drawdown will stop trailing once the trailing stop hits the profit target. That means once your THRESHOLD BALANCE reaches your profit goal NOT your ACCOUNT BALANCE
For example in a 50K evaluation account, once the auto liquidation threshold value gets up to $53,000 it will stop trailing. 

(The following only applies to TRADOVATE accounts)

During your evaluation your trailing drawdown will NOT stop trailing.

ANOTHER EXAMPLE:

Each evaluation and PA account comes with a max drawdown amount.
For example, the 50K account, which has a Trailing Threshold of $2,500.
This means that the max you can lose is $2,500 from the highest profit point (open equity, not closed profit).
For example, you begin the first day with $50,000 and the max you can lose is $2,500 or a low of $47,500. You place your first trade and the active trade is in profit $600 your max drawdown always TRAILS the profit peak in real time so now the max drawdown is $48,100. ($50,600- $2,500 = $48,100).
However, you have not closed the trade yet and by the time you close the trade you only made $100 profit. Your max drawdown remains at $48,100 even though you only have $50,100 in the account (because at one time during an active trade you reached a peak of $50,600). The max drawdown always trails by $2,500 from the highest point.

In your Paid/Funded account, the trail will stop when you have exceeded the risk allotment by $100. For example, say you are allowed $2500 trail and start at $50,000. Once you exceed $52,600, your trail will stop at $50,100 and not trail up any further.

For the STATIC accounts:

The drawdown will remain the same as it is already static. E.g. 100k STATIC account, the drawdown will remain at $99,375 and will not change.

ADVANCED - More Detailed full length Webinar on how the Trailing Threshold works with live examples: