Trailing Drawdown refers to the calculation based on the last High Water-Mark balance, representing the peak closed account balance within a specified period.
For example, consider an account with an initial balance of $100,000 and a Trailing Drawdown of 6%. Consequently, the Trailing Drawdown loss-level limit is set at $94,000. However, once you realize profits on the account and the balance increases above the initial amount, for instance to $101,000, the Trailing Drawdown percentage of 6% will then be immediately applied to the new balance, adjusting the Trailing Drawdown level to $95,000. Once the account reaches profit in the amount of Trailing Drawdown, the Trailing Drawdown will lock to the initial balance and won’t be moving further anymore. In this particular case, this will happen after the account reaches $ 106,000 in balance.
The High Water-Mark is simply the highest balance your account has ever reached. In this example, the High Water-Mark starts at $100,000.
Once your account hits a new high, the Trailing Drawdown loss limit updates immediately—not the next day.