The Maximum Total Loss is the cumulative loss limit allowed during the challenge.
It includes both closed positions and any unrealized losses from open trades at any moment during the evaluation period.
If your account reaches or exceeds this threshold at any time, the challenge will be automatically failed, even if the account later recovers.
How is it calculated?
This threshold is a fixed percentage of the account’s Initial Balance, and it does not reset or adjust based on profits made.
10% of the Initial Balance in the Two-Phase Challenge
6% of the Initial Balance in the One-Phase Challenge
Example
In a $100,000 Two-Phase Challenge, the maximum total loss allowed is $10,000.
If at any point the Balance or Equity of your account drops below $90,000, the rule will be considered breached , even if the account later recovers above that level.
Key points
It is calculated at all times, whether trades are open or closed.
The rule is always based on the Initial Balance, regardless of any profits made.
The lowest value between balance and equity during trading is taken into account.
To avoid breaching this rule, it’s essential to apply responsible risk management and avoid exposing your equity to significant drawdowns from open positions.