Overall drawdown

Initial Balance Registration:

The system records the Start Balance at the beginning of the challenge.

This value serves as a reference to calculate the 10% Overall Drawdown.

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Disqualification Level Calculation:

A Disqualification Equity Threshold is set, which is:

Start Balance - 10% of the Start Balance.

If the equity falls below this level at any point, the account will be disqualified.

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Real-Time Monitoring:

The system continuously tracks the equity.

If the disqualification level is reached, the system:

Closes all open positions.

Disables the account.

Sends an email notification with the resolution details.

Note: In this scenario, the trader maintained effective risk management by not exceeding the 5% daily drawdown limit. However, after multiple losing trades, they hit the 10% overall drawdown threshold, leading to disqualification.

Formula to Calculate Overall Drawdown

Total Loss Calculation:

Final Equity - Initial Balance = Result

Drawdown Percentage Calculation:

(Result * 100) / Initial Balance = % Drawdown

Simulated graphical representation:

✅ Day 1:

Initial Equity: $100,000

Maximum Overall Loss: $10,000

Disqualification: $90,000

❌Day 5:

Disqualification: $90,000