If you join a $100k evaluation program, the starting balance will be $100,000, the TMD will be set at $98,000. On day 6 the trader makes some money, the TMD reaches the starting account balance of $100,000, where it now freezes for the lifetime of the account Note how the TMD has not moved and is still at $99,000. On day 5 the trader loses some money, and the account balance is now back to $100,000.

On day 4 the trader has made some money and the account balance is $102,000, the TMD has now trailed to $99,000. Therefore it is set at $97,000.īy day 2 the trader has lost $1000, the TMD is still $97,000. On day 1 the account balance is $100,000, the TMD is -$3000. If your account balance goes down the next day because of trading losses, the trailing maximum drawdown doesn’t move as it is pegged to the highest balance you have had in your account.Īt TradeDay, the TMD amount is set by the program you signed up for.īelow is an example of a trader with a TMD of $3,000. It trails up as the account earns profits. The t railing maximum drawdown (TMD) is a limit that trails your account growth. Please note, on funded accounts, the TMD is calculated on the ' gross' balance, that would include any withdrawals made, not on the ' net' balance, which would be minus the withdrawal.Although the the End-Of-Day (EOD) trading account balance is used to calculate your TMD each day, the TMD is enforced in real time, during the day, intraday.It continues to trail your account growth until it reaches the starting account balance.TradeDay calculates the TMD limit on end-of-day balances, for both the evaluation and funded trading accounts.Here are 2 key points for TradeDay traders: If you have an open position and you touch the limit, your positions will be liquidated, the trading shut off, and you will have failed the evaluation, or lost your funded trading account. Think of it as a line you will not be allowed to cross. A trailing maximum drawdown (TMD) limit is the maximum amount of money you are allowed to lose.

Max drawdown trading