How is the daily drawdown calculated?
Daily drawdown is 5% of the starting equity or balance of the given day.
If your starting equity is $105,000 but your starting balance is $100,000 then the daily drawdown will be based on your starting equity because it is higher. 5% x $105,000 = $5,250. Your account balance/equity cannot go below $105,000 – $5,250 = $97,750 for the day.
If your starting equity is $94,000 but your starting balance is $98,000 then the daily drawdown will be based on your starting balance because it is higher. 5% x $98,000 = $4,900. Your account balance/equity cannot go below $98,000 – $4,900 = $93,100 for the day.
Note that the equity considers closed and opened positions.
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