Help CenterDaily Drawdown Explained:
Starting Scenario: Your initial account balance is $100,000.
Day 1: You earn a profit of $2,000, increasing your balance to $102,000.
Day 2: The maximum daily loss allowed is 5% of your previous day's balance, which amounts to $5,100. Therefore, if losses occur, your account balance should not drop below $96,900 ($102,000 - $5,100).
Result of Day 2: You experience a loss of $1,000, bringing your balance down to $101,000.
Day 3: The new maximum daily loss is again 5% of the starting day balance, now $5,050, setting your lower limit at $95,950 ($101,000 - $5,050).