How to calculate max and daily drawdown?

Daily 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($102,000 x 5%). 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 ($101,000 x 5%), setting your lower limit at $95,950 ($101,000 - $5,050).

Max Drawdown Explained:

The maximum drawdown allowed is 10% of your initial balance when you signed up.

This means your account must never fall below 90% of the initial balance, regardless of profits. 

For a starting balance of $100,000, your equity should not drop below $90,000 at any point.

Note: The maximum drawdown does not reset like the daily drawdown; it is a persistent threshold based on your initial account balance.

Note: Both max drawdown and daily drawdown calculations include any floating losses, swaps, and commission rates.