Overview
Virtual Maximum Drawdown - Refers to the lowest level that you cannot trade below in your account simulated equity.
High Water Mark - Represents the initial virtual balance of your account or, if higher, the highest balance achieved
Virtual Relative Drawdown - Measures the difference between the High Water-Mark and the Virtual Maximum Drawdown.
In both, the Evaluation and Simulated Funded Stages, you will have a Virtual Relative Max Drawdown of 6% of the starting account virtual balance. Whenever you successfully close a profitable simulated trade and increase your account's virtual balance beyond the initial balance, your virtual Maximum Drawdown level adjusts accordingly.
This means the virtual Max Drawdown will consistently remain 6% behind your virtual account's balance until either you achieve the simulated Profit Target or the virtual Max Drawdown level matches the starting balance, where it will lock in permanently. Whenever your closed trades surpass 6% of your initial virtual account balance, the virtual Relative Max Drawdown will lock in and cannot be altered afterward.
The virtual Relative Drawdown represents the gap between the highest closed virtual balance (known as the High Water Mark or HWM) and the virtual Maximum Drawdown. This means if a trader on a $100,000 virtual funds account makes a closed balance of $108,000, the virtual Relative Drawdown is now 8%. If the trader makes a closed virtual balance of $121,000, the virtual Relative Drawdown is now 21%. However, if you go into Drawdown and your virtual Relative Max Drawdown Breach Level is higher than your virtual Daily Drawdown breach level, both are set at the same level as the virtual Maximum Drawdown.
Example:
If you have a $100,000 virtual funds account and your balance reaches $103,000, your virtual Max Drawdown will be set at $97,000. If your simulated equity goes below this level at any given time, your account will be terminated.
If you have a $100,000 virtual funds account and your balance reaches $106,000, your virtual Max Drawdown will be set at $100,000 and at that level, it will stop trailing your virtual balance. If you reach a virtual balance of $112,000, your virtual Max Drawdown level will still be $100,000.
If you have a $100,000 virtual funds account and your virtual balance reaches $103,000, your virtual Max drawdown will be set at $97,000. If your simulated equity goes below this level at any given time, your account will be terminated. Therefore if you go into drawdown and close the day at $97,500, and the next day our simulated equity is $98,000, your virtual Max Drawdown Breach Level and virtual Daily Drawdown Breach Level would be set as the same level as your virtual Maximum Drawdown.