The Maximum Trailing Drawdown is determined by first calculating the drawdown amount — this is the drawdown percentage taken from your starting balance.
We then subtract that amount from your end-of-day High-Water Mark (HWM) to find your drawdown limit.
Example:
On a $100,000 account with a 6% drawdown, the drawdown amount is $6,000.
If you end the trading day with a HWM of $102,000, your new drawdown limit becomes $96,000 ($102,000 – $6,000).
If your equity ever falls below $96,000, your account will be breached.