Can I incur a daily loss under the 2.75% rule?
Yes, as shown in Example 2. By closing transactions (and recalculating the 2.75% risk level), a trader can incur a daily loss that could lead to account closure. Attention: this rule applies only to simulated live accounts.
Here are two examples to illustrate how this rule works.
Example 1.
The trader has an account of €10,000. All opened positions (including commissions) have reached a risk of 2.75% (10,000 x 2.75% = 275). If open positions reach a €275 loss, the account will be frozen for 24 hours and all transactions will be closed. Trading access will resume after 24 hours.
Example 2.
The trader has an account of €10,000. In open transactions, there is a 2.5% loss. They are close to reaching 2.75%.The trader decides to close half of the transactions. How is 2.75% calculated now? It is calculated based on the information above, i.e., from the last recalculated balance (after trades are closed). Therefore, by closing a 1.25% loss (half of 2.5%), the trader closed a €125 loss. The balance is recalculated to 9,875 (10,000 - 125). From this balance, i.e., 9,875, the new 2.75% is calculated. Therefore, the trader can now have an open loss of -271.62.