At Amadeux, we calculate drawdowns based on the starting balance of your trading account. Drawdown refers to the reduction from your account’s peak balance to its lowest point during a specific trading period.
There are 2 main balance-based drawdowns, the Daily Loss Limit and the Maximum Loss Limit.
Daily Loss Limit
The drawdown is calculated from your daily starting balance. This means the highest point for measuring drawdowns is always the account balance at the beginning of every day, defined by the server time.
If your balance drops below the daily starting balance, the difference between the highest point (daily starting balance) and the lowest point during that period is considered your daily drawdown.
Example: If you start with a balance of $105,000 and your account drops to $98,000 in the same day, your drawdown is $7,000, or approximately 6.67%.
Maximum Loss Limit
The drawdown is calculated from your account initial balance. This means the highest point for measuring drawdowns is always the account balance at the beginning of each step.
If your balance drops below the starting balance, the difference between the highest point (starting balance) and the lowest point during that period is considered your drawdown.
Example: If you start with a balance of $100,000 and your account drops to $95,000, your drawdown is $5,000, or 5%
You can learn more about the Daily Loss Limit and the Maximum Loss Limit in their respective articles.