Here’s an overview of the different types of trailing drawdowns.

Retail Step 1	Retail Step 2	Retail Plus
End of Trade	Intra- Trade	Intra- Trade

Each evaluation account starts with a maximum allowable drawdown and max allowable position size.

The max loss drawdown varies for each plan. 

For example, in a Futures Retail TraderPlus evaluation, There is no daily max drawdown limit but there is a trailing max drawdown limit of $3,500.

If your risk allowed is $3,500, it will trail the highest live profit by $3,500.

Example:

In the RetrailTradrr Plus evaluation, your starting balance is $100,000 and your trailing threshold will be $96,500.

In this example let’s assume you make $1,000 and close the trade. Your balance will be $101,000 and your threshold will be $97,500 ($3,500 below $101,000).

On your next trade, your profit reaches an unrealized balance of $102,000 (+$1,000), but you do not close the trade.  The trade comes back against you to the original entry and you exit the position. 

Your balance remains the same as when you entered the trade; $101,000.   

Your new trailing max threshold is now $48,500 which is $2,500 below your balance.  

As you can see, the drawdown threshold liquidation is not based on when you close the trade but is based on the highest balance when you are in a trade.

It is essential to understand where your trailing thresholds are at all times.  Your trailing drawdown will always rise when you make a new equity high.  The trailing drawdown will never go down and remains in effect until you reach your profit objective.

What is a CME Price Limit?

A price limit is the maximum price range permitted for a futures contract in each trading session. Different actions occur when markets hit the price limit depending on the traded product. Markets may temporarily halt until price limits can be expanded, remain in a limit condition, or stop trading for the day based on regulatory rules.

You Can Find More Information on Price Limits Here:

https://www.cmegroup.com/trading/price-limits.html

Items to Remember RE: Price Limits:

• Price limits are based upon the end-of-day settlement prices and will vary based on product, time of day (day session or overnight session), and contract month.
• Limits are updated daily on the CME website (link above)
• Know your limits for the product you are trading.  They are subject to change without notice.  You are responsible for knowing the limits of the market you are trading.
• This risk control measure is implemented to protect your capital and the firm’s trading capital.

Commonly Asked Questions RE: the 2% limit rule:

Q:  What is the most efficient way to track this information?  

A:  You monitor the CME website for changes in the product, manually calculate the percentage, or the easiest and most efficient way is to use the tools provided by your trading platform, i.e., the quote board.

Q:  What happens if I break this rule?

A:  If you break this rule during your evaluation, your account will no longer be eligible for funding.  If you break this rule in a live-funded account, we will review your performance, and the loss of a live account is possible.

Q:  Why is this an important consideration in my trading?

A:  Price limits are enforced by the CME and the regulatory agencies.  It is important as a trader because price volatility creates extreme swings in price action, and once a market is halted, prices can “re-open” aggressively higher or lower.  This can mean dramatic swings in the value of your position and can ultimately lead to significant, unexpected losses.

During the evaluation period and while in the simulated trading environment, you will be charged $1.85 per side in simulated trading fees.  This will apply to the E-mini-Futures products.

Micro products will be charged $.60 per side in simulated trading fees.

To determine a trader’s ability to be consistently profitable, the trader will need to show that not only can they make consistent profits, but the trader also needs to show the ability to manage risk.

Simply put, TradeFundrr wants to avoid seeing you hit the target objective in a single trade and then scalp the remaining time during your qualification period.

To demonstrate to TradeFundrr your ability to be profitable and to manage risk, you must have the number of trading days averaging at or above 50% of your best trading day.

Example:  

Best Trading Day (net profit) = $5,000 (50% = $2,500 consistency target)

2^nd Best trading day (net profit) = $3,500

3^rd Best Trading Day (net profit) = $3,000

4^th Best Trading Day (net profit) = $2,900

5^th Best Trading Day (net profit) = $2,100

6^th Best Trading Day (net profit) = $1,500

Total of the second to the sixth best trading days (net profit) = $13,000

Total trading days $13,000 = $2,600 average per day, which is now greater than $2,500 consistency target.

Here is an example of the consistency tracker in the TradeFundrr Dashboard.

A trailing drawdown is a minimum account balance that will increase as you make profitable trades.  

It is different from the daily drawdown.

Your account will be auto-liquidated if you hit or exceed the trailing drawdown.  

Trailing drawdown in practical terms:

1. Know the trailing drawdown for the evaluation in which you are participating. For this example, we will assume that your evaluation has a trailing max drawdown of $3,000
2. Understand how it moves. Simply put, it always moves up and never down.  The trailing max drawdown is calculated at the end of the trade, which increases your peak equity.

The following example is an evaluation with a trailing drawdown of $3,000 with a starting balance of $100,000 buying power.

Trading Day #1

a.) Trade #1, you make $2,500.

b.) Trade #2 you lose $500 with an end-of-day PnL (not including commissions) of $2,000

End of day trading balance (before commissions) is $102,000.

As you enter the next trading day, your trailing max drawdown increased by $2,000 from the lowest point ($97,000) and has now been adjusted to a max trailing drawdown of $99,000.

Trading Day #2

a.) Trade #1 you lose $1,500 and stop trading.

End of day trading balance (before commissions) is $100,500

As you enter the next trading day, your trailing max drawdown remains at $99,000.

Putting it all Together | Daily Max and Trailing Max Drawdown

We will use the same example as discussed in the above paragraph.

On this day, the daily loss limit is $1,000. 

Remember, the smaller number between the drawdown and max trailing drawdown is always applicable. 

Trading Day #1

a.) Trade #1, you make $2,500,

b.) Trade #2 you lose $500 with an end-of-day PnL (not including commissions) of $2,000

End of day trading balance (before commissions) is $102,000

As you enter the next trading day, your trailing max drawdown increased by $2,000 from the lowest point ($97,000) and has now been adjusted to a max trailing drawdown of $99,000

Trading Day #2

a.) Trade #1, you lose $1,000, and your evaluation has been auto-liquidated due to the violation of the daily loss limit.

Even though you did not violate the trailing max drawdown, the daily loss limit rule was violated, and your account was auto-liquidated.

Tips to Manage Daily and Trailing Max Drawdown

1.  First, you need to know exactly where you are to start the day.  Which drawdown rule will you need to adhere to; Daily loss limit or trailing max drawdown?  Remember, the value which is closest to your starting balance is most applicable.
2. Best practices dictate that you set a stop loss limit that is safely within the drawdown limits.
3. Remember the daily loss limit cannot be hit or exceeded during the trading day or your account will be liquidated and will be deemed ineligible for funding.  
4. Monitor your drawdown using the TradeFundrr dashboard. The dashboard will provide you with live up-to-date information.

Loss limits, in general, are designed to provide proper risk control and a stopping point if you are having a bad trading day.  Losing trading days are inevitable, and being able to have a fixed stopping point will allow you to “live to trade another day.”

The daily loss limit is defined as the largest amount an account size can decrease from the day’s starting balance.   

The daily loss limit is inclusive of all your trades, including commission/slippage that may occur.  

The daily loss limit is a cumulative total for all instruments traded.  

For Futures, the trading day is defined as 5:00 pm to 3:10 PM CST

For Stocks, the trading day is defined as:

Cash session (8:30 am – 3:00 pm CST) and the Swing session (3:00 am – 7:00 pm CST).

For Options, the trading day is defined as:

Cash session (8:30 am – 3:00 pm CST) and the Swing session (8:30 am – 3:15 pm CST).

(Note: Swing trading, as defined for options, is that you can hold over to the next day. However, you cannot trade those positions until the opening of the cash session.)

At any point that the daily loss limit has been hit or exceeded, your trade(s) and the trading account can be automatically liquidated and disabled without notice.   This account will no longer be eligible for funding. 

Additionally, even if the account is not automatically disabled/liquidated, the daily loss limit will still be “hit,” and your account will no longer be eligible for funding.If you are using NinjaTrader, by default, your PnL totals DO NOT deduct commission in the performance summary section of the trade reporting.   It is therefore recommended to use the TradeFundrr dashboard to monitor your trades for commissions and total balance.