What is End of Day Drawdown?

🎓 PROP TRADING TERMINOLOGY

What is End of Day Drawdown? 🌅 

With firms that have end of day drawdowns, your max daily loss will reset at the end of each day.

EXAMPLE 1: Let's say you're participating in a trading challenge with a starting account balance of $250,000. Your max daily loss will reset at the end of each day. Initially, your max daily loss is set at 4%, which is $10,000. 💼

If you end the day with a $15,000 closed profit, your account balance will now be $265,000. Consequently, your max daily loss for the next day will be recalculated based on this new balance, which is $255,000. Your account will be breached if your equity falls below $255,000 at any point throughout the day. ⚠️

EXAMPLE 2: Imagine your account is in a $100,000 challenge, and you have an open position that is $7,000 in profit when the new day starts at 5pm EST. Following the reset, the drawdown would be calculated as $107,000 - $4,000 = $103,000. If your equity dips below $103,000 at any point during the day, you have violated the max daily drawdown. 📉

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