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For participants in the TurboTrade.Fund Challenge, a daily drawdown of up to 4% of their initial account balance is allowed.
To compute the daily loss limit, use the formula: Daily loss limit = (Your Last day’s Balance – Today’s Balance) / Equity. It’s essential to note that the daily loss limit resets at midnight according to the server time.
Let’s delve into examples to illustrate this calculation:
Case 01:
For instance, if your account is $100,000, the maximum daily loss limit is $4,000, meaning you cannot exceed a $4,000 loss in a single day. If you’ve already incurred $3,000 in closed trades, your allowable loss, including floating losses, is $1,000. This calculation incorporates swap and commission rates, and exceeding $1,000 will be considered a violation.
Case 02:
Similarly, if you’ve gained $5,000 in profit in a day, you can afford to lose $9,000 ($5,000 profit + $4,000 daily loss limit) before it’s considered a violation.
Case 03:
Consider a scenario where you’ve lost $3,000 in a day and initiate a trade with a floating loss of -$2,500. Upon closure, it turns into a positive $500. According to the terms, the violation occurs when the loss surpasses $4,000.
Case 04:
Additionally, the daily loss limit resets at midnight server time. For example, if you’ve gained a $2,000 profit in a closed trade and currently have a $5,000 floating loss, you haven’t violated the daily drawdown because your current daily loss is +$2,000 – $5,000 = -$3,000. However, holding this trade with a $5,000 floating loss after midnight would breach the daily loss limit as a new day begins, and you’ve already exceeded the $4,000 limit.