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What is the maximum drawdown limit for a trading account?
What is the maximum drawdown limit for a trading account?
Updated over a week ago

The maximum overall drawdown limit is set at 10% of the initial account balance. This means that the account must not decrease by more than 10% from its starting balance at any point. This rule applies to both the account balance and equity, taking into account open positions as well.

For example, if you begin with an account balance of $100,000, you cannot allow the total balance of your account to drop below $90,000 at any time. This overall drawdown limit is strategically implemented to manage risk and protect the capital.

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