Max Risk Rule

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How It Works

The max risk rule is not calculated per individual trade. Instead, it measures your total floating risk at any given time.

The rule checks the difference between:

• Your account balance

• Your current equity

If that difference exceeds 2% of the initial account balance, it is a breach.

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Key Principle

This rule applies:

• Across all open trades combined

• Regardless of the number of positions

• Regardless of the symbol being traded

Example 1 – Single Trade

Account size: 100,000
Max allowed risk: 2,000

You open a trade and your floating loss reaches:

• Equity = 98,000

• Balance = 100,000

Difference = 2,000 → Within limit

If equity drops to 97,900:

• Difference = 2,100 → Breach

Example 2 – Multiple Trades

You have 3 open trades:

• Trade 1: -800

• Trade 2: -700

• Trade 3: -600

Total floating loss = 2,100

• Balance = 100,000

• Equity = 97,900

Difference = 2,100 → Breach

Even though no single trade exceeded 2%, the combined exposure caused the breach.

Example 3 – Profit Then Exposure

Account grows to 103,000
Balance = 103,000

You open trades and floating loss becomes 2,100

Rule is still based on initial balance (100,000):

• Max allowed = 2,000

Even though you are in profit overall:

• This is still a breach

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Daily Drawdown

Example

Start of day:

• Balance: 100,000

• Equity: 101,000

Daily limit:

• 101,000 - 3,000 = 98,000

Falling below 98,000 results in a breach.

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Trailing Drawdown

Example

Starting balance: 100,000
Drawdown: 95,000

Account grows to 103,000
Drawdown moves to 98,000

At 105,000:

• Drawdown locks at 100,000

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Trading Restrictions

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Key Notes

• Risk per trade is strictly enforced

• Floating losses count toward drawdown

• Trailing drawdown behaves similarly to evaluation models