How is drawdown calculated?

The daily drawdown is based on equity from the server. Total drawdown on initial capital. Example.

A trader has an account of EUR 300,000

During the first trading day, he can risk a maximum of 5.5% (daily drawdown).

Day 1. The trader has earned EUR 10 000
His balance is EUR 310 000

Day 2. The daily drawdown is: 310 000 x 5.5% = EUR 17 050
Total drawdown is: 300 000 x 11% = EUR 33 000
The trader cannot risk more than EUR 17 050.

Day 3. The trader has lost EUR 15,000.
His balance is EUR 295 000. He has not reached the daily loss limit (calculated on the basis of the previous day EUR 310 000 x 5.5% = EUR 17 050)

Day 4. The trader starts with a balance of EUR 295 000
Daily drawdown: EUR 295 000 x 5.5% = EUR 16 225 - this is how much he can risk today
Total drawdown EUR 300 000 x 11% = EUR 33 000 (267 000 to which he can fall).

Counting the daily drawdown on an equity basis helps traders protect their profits from excessive risk.