What is the Maximum Loss Limit?

The Maximum Loss Limit (also known as the MLL or trailing drawdown) is the lowest your account balance can go. As you make profits, it follows along kind of like a safety net to help you keep what you’ve earned and avoid giving too much back to the market.
Here’s how it works for each account size:

• $50K account – $2,000 MLL
  

• $100K account – $3,000 MLL
  

• $150K account – $4,500 MLL

How is the Maximum Loss Limit Calculated?

The Maximum Loss Limit (MLL) is calculated based on your highest end-of-day account balance, not on intraday or unrealized gains.

Example: $50,000 Account (MLL = $2,000):

• On your first trading day, you earn $500, bringing your balance to $50,500.
• The MLL is then set at $48,500, which is $2,000 below your new account high.
• If you lose $500 the next day, your balance drops back to $50,000, but your MLL remains at $48,500.

Once the MLL is set at a higher level, it never decreases during your evaluation.
If your account balance falls to or below your MLL, the account is considered in violation of the rule.

This trailing structure encourages consistency and risk control, two key traits of long-term trading success.

Once the Maximum Loss Limit reaches the initial starting balance, it becomes fixed for the remainder of the account evaluation.

For example, if you earn $2,500 and your account balance increases to $52,500, your MLL will trail up to $50,000. At that point, it will no longer adjust upward, regardless of any additional profits. This ensures your protected capital never falls below the starting balance once that threshold is reached.

When Is the Maximum Loss Limit Calculated?

The Maximum Loss Limit (MLL) is calculated based on your account balance at the end of each trading day. It does not adjust in real time while you are actively trading.

If your account balance falls below the current MLL during live trading, your positions will be liquidated immediately, your account will be locked, and the rule will be considered broken.

It’s important to note that your MLL is only updated between trading sessions, not intraday so managing your risk throughout the trading day is essential.

What Happens If I Break the Maximum Loss Limit Rule?

If you exceed the Maximum Loss Limit (MLL), your account will be automatically liquidated for the remainder of the trading day. Any new orders placed after breaching the limit will be rejected.

In an Evaluation Account, the account becomes ineligible for funding until you choose to Reset it. However, you may continue trading on the ineligible account for practice once the markets reopen, or use your Practice Account if preferred.

In a Sim Funded Account or Live Funded Account, hitting the MLL will result in the account being closed at the end of that trading day.