[Crypto Account] – How does trailing drawdown work for Crypto account?

The Max Trailing Drawdown is fixed at 6% of your starting balance, and it moves (or “trails”) your High Water Mark (‘HWM’ – based on closed balance) until 6% profit made.

It will continue to trail your High Water Mark until your account reaches 6% profit.

Once your account achieves 6% profit from your initial balance, the Max Trailing Drawdown locks in at your starting balance and no longer trails the High Water Mark.

The 6% Max Loss Limit Calculation is always calculated as 6% of the initial account balance and does not change, regardless of profits or losses in the account.

Example 1:

If you start with a $100,000 Crypto Account, your max overall loss will be 6% ($6,000).

This means your account should not go below $94,000 in equity at any time otherwise, it will be in violation.

Example 2:

If your High Water Mark reaches $102,000, your max drawdown will move up to $102,000 – $6,000 = $96,000.

This means your account should not fall below $96,000 in equity or balance at any time.

Example 3:

If your High Water Mark reaches anything above $106,000, your Max Trailing Drawdown will lock at your initial balance ($100,000).

This means your account should never drop below $100,000 in equity or balance at any time.

Example 4:

If your High Water Mark reaches $110,000, it means you’ve achieved a 6% profit, and your Max Trailing Drawdown is now locked at $100,000.

From this point, you have a 10% overall drawdown range on the account.

Example 5:

If your High Water Mark reaches $112,000, your Max Trailing Drawdown remains locked at $100,000.

So, if your equity later drops to $102,000, your Max Trailing Drawdown will still stay fixed at $100,000.

Additional Examples 

$5,000 Crypto Account Example:

Your 6% Max Trailing Drawdown equals $300.

Starting balance: $5,000

Max overall loss: $5,000 – $300 = $4,700

If your High Water Mark rises to $5,200, your new drawdown limit moves to $4,900.

Once your High Water Mark exceeds $5,300 (6% profit), your Max Trailing Drawdown locks at $5,000 permanently.

$25,000 Crypto Account Example:

Your 6% Max Trailing Drawdown equals $1,500.

Starting balance: $25,000

Max overall loss: $25,000 – $1,500 = $23,500

If your High Water Mark reaches $26,000, your drawdown limit moves up to $24,500.

Once your High Water Mark exceeds $26,500 (6% profit), your Max Trailing Drawdown locks at $25,000 and stops trailing.