What is the maximum drawdown limit for a trading account?

Posted on 2024-09-08 Updated on 2024-11-28

The overall drawdown limit is established at 10% of the initial account balance. Consequently, the account must not experience a decline exceeding 10% from its original balance at any time. This regulation is applicable to both the account balance and equity, including considerations for open positions.


For instance, if the initial account balance is $100,000, the total balance must not fall below $90,000 at any point. This drawdown limit is strategically designed to mitigate risk and safeguard the capital.

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