[Lighting Plan] How does trailing drawdown work on Lightning Plan?
he Max Trailing Drawdown is fixed at 4% of your starting balance and moves (or “trails”) your High Water Mark (‘HWM’) until 4% profit is made.
It will continue to trail your High Water Mark until your account reaches 4% profit.
Once your account achieves 4% profit from your initial balance, the Max Trailing Drawdown locks in at your starting balance and no longer trails the High Water Mark.
The 4% Max Loss Limit Calculation is always calculated as 4% of the initial account balance and does not change, regardless of profits or losses in the account.
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Scenario 1: No Profit Yet
- Starting Balance: $100,000
- Initial Max Trailing Drawdown: $100,000 – (4% of initial balance: $4,000 FIXED) = $96,000
- Daily Drawdown: $100,000 (Previous day’s balance) – 3% = $97,000
Breach Conditions:
If the account balance or equity falls below $96,000, the account breaches as the equity/ balance falls below the Daily Drawdown limit of $97,000 & the Max loss of $96,000
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Scenario 2: Small Profit ($102,000 HWM)
- High Water Mark: $102,000
- Max Trailing Drawdown: $102,000 – (4% of initial balance: $4,000 FIXED) = $98,000
- Daily Drawdown: $102,000 (Previous day’s balance) – 3% = $99,060
Breach Conditions:
If the account balance or equity falls below $98,000, the account breaches as the equity/balance falls below the Daily Drawdown limit of $99,060 & the Max Loss of $98,000.
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Scenario 3: Larger Profit ($104,000 HWM – Max Trailing Drawdown Locks)
- High Water Mark: $104,000 (4% profit reached)
- Max Trailing Drawdown Locks at: $100,000 (starting balance)
- Daily Drawdown: $104,000 (Previous day’s balance) – 3% = $100,880
Breach Conditions:
If the account balance or equity falls below $100,000, the account breaches as the equity/balance falls below the Daily Drawdown limit of $100,880 & the Max Loss of $100,000.
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Scenario 4: Big Gain and Partial Loss ($110,000 HWM, Drops to $105,000)
- High Water Mark: $110,000
- Max Trailing Drawdown: Locked at $100,000 (since 4% profit was reached)
- Daily Drawdown: $110,000 (Previous day’s balance) – 3% = $106,700
Breach Conditions:
If the account balance or equity falls below $105,000, the account breaches as the equity/balance falls below the Daily Drawdown limit of $106,700 & the Max Loss of $100,000.
Scenario 5: Big Profit, Then Major Drop ($120,000 HWM, Drops to $99,000)
- High Water Mark: $120,000
- Max Trailing Drawdown: Locked at $100,000
- Daily Drawdown: $120,000 (Previous day’s balance) – 3% = $116,400
Breach Conditions:
If the account balance or equity falls below $99,000, the account breaches as the equity/balance falls below the Daily Drawdown limit of $116,400 & the Max Loss of $100,000.
Key Takeaways
✅ The Max Trailing Drawdown follows your High Water Mark until you reach 4% profit.
✅ Once 4% profit is reached, the Max Trailing Drawdown locks at your starting balance and no longer trails.
✅ The Daily Drawdown is 3% of the previous day’s balance, resetting every day.
✅ A breach can occur from either the Max Trailing Drawdown or the Daily Drawdown. If either is breached, the account is lost.
✅ Even if the account grows significantly, it will still breach if it falls below the locked Max Trailing Drawdown ($100,000) or the Daily Drawdown limit.
