How do withdrawals affect drawdown on 1 and 2 phase accounts
When you request a withdrawal, the Max Drawdown locks at your starting balance,
regardless of profits made. This means the buffer created by your profits is reduced by the
amount withdrawn. Withdrawing all available profit would put your account at risk of
breaching the drawdown thresholds.
regardless of profits made. This means the buffer created by your profits is reduced by the
amount withdrawn. Withdrawing all available profit would put your account at risk of
breaching the drawdown thresholds.
Examples for 1-Phase Accounts
Example 1:
●Starting Balance: $100,000
●Daily Drawdown: 3% ($95,000)
●Max Drawdown: 6% ($94,000)
●Scenario: You make $8,000 profit and request a $6,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000 (starting balance).
○ Remaining Buffer: $2,000 (from $8,000 – $6,000).
Example 2:
●Starting Balance: $100,000
●Daily Drawdown: 3% ($95,000)
●Max Drawdown: 6% ($94,000)
●Scenario: You make $20,000 profit and request a $10,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000.
○ Remaining Buffer: $10,000 (from $20,000 – $10,000).
Example 3:
●Starting Balance: $100,000
●Daily Drawdown: 3% ($95,000)
●Max Drawdown: 6% ($94,000)
●Scenario: You make $6,000 profit and request a $6,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000.
○ Outcome: Account breaches the Max Drawdown threshold. The withdrawal
will still be processed, but the account is forfeited.
Examples for 2-Phase Accounts
Example 1:
●Starting Balance: $100,000
●Daily Drawdown: 4% ($96,000)
●Max Drawdown: 10% ($90,000)
●Scenario: You make $10,000 profit and request a $5,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000.
○ Remaining Buffer: $5,000 (from $10,000 – $5,000).
Example 2:
●Starting Balance: $100,000
●Daily Drawdown: 4% ($96,000)
●Max Drawdown: 10% ($90,000)
●Scenario: You make $25,000 profit and request a $15,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000.
○ Remaining Buffer: $10,000 (from $25,000 – $15,000).
○ Effect: Max Drawdown locks at $100,000.
○ Remaining Buffer: $10,000 (from $25,000 – $15,000).
Example 3:
●Starting Balance: $100,000
●Daily Drawdown: 4% ($96,000)
●Max Drawdown: 10% ($90,000)
●Scenario: You make $10,000 profit and request a $10,000 withdrawal.
○ Effect: Max Drawdown locks at $100,000.
○ Outcome: Account breaches Max Drawdown threshold. The withdrawal will
still be processed, but the account is forfeited.
What Breaches an Account?
An account breaches if:
1. Daily Drawdown is exceeded.
2. Max Drawdown is exceeded.
3. Full profit withdrawal leaves no buffer, and placing a new trade violates the Max
Drawdown.
Key Takeaways
●Always leave a buffer when withdrawing profits to avoid breaching the account.
●Understand the difference between Daily and Max Drawdown to manage your
account effectively.
●Plan withdrawals carefully to continue trading without hitting locked drawdown limits.
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