1. Daily Loss Limit
- If it is reached, you can RESET to bring your account balance back to the initial account balance and keep trading, or wait til next day to trade your account again - your choice
The Daily Loss trails the account balance and includes fees and simulated commissions.
Do NOT use the Daily Loss Limit as your stop loss - it will not stop your trade, it will just prevent you from placing new trades if met or exceeded. If your trade pushes beyond your Daily Loss Limit your trade can then meet your LTMAB, which would automatically liquidate your account.
Ensure your Net P&L does not hit or exceed the Daily Loss Limit as per the account you choose to trade. If at any time you exceed this amount for your account, any open positions or pending orders may be flattened or canceled and new orders will be rejected. This encourages proper risk management.
If your daily loss limit has been reached, you may reset your account and begin to place new trades once reset.
Being cognizant of if a trader's trades are coming within the Daily Loss Limit is the personal responsibility of the trader. This needs to be watched personally by you as there is nowhere to track this in R|Trader. Please make sure to keep an eye on your daily limit from your cash balance and make sure to calculate in commissions as well (you can also set commissions within your trading platform). In a live account, this is something we track personally and do not expect a system to calculate or track this for us, so in preparation of a live account be on top of your Daily Loss Limit at all times.
2. Max Drawdown | Limited Trailing Minimum Account Balance (LTMAB). The Max Drawdown Trails intra trade and is called the Limited Trailing Minimum Account Balance.
- If met, this will auto liquidate your account and you will lose the test. You will see a message that says,'Order can be placed by Administrators only'.
- If you meet the LTMAB You will HAVE to reset if you wish to continue trading within your subscription period.
- Tracking: To prevent your trades from meeting this, track your LTMAB in the R|Trader Dashboard in Auto Liquidate Threshold (ALT)).
Photo of Auto Liquidate Threshold on far right on R Trader.
The LTMAB is Calculated Live Intra-Trade . The Limited Trailing Minimum Account Balance will increase a defined distance as your account balance increases and is calculated in Real-Time during your trading day. If the balance decreases, then your Trailing Minimum Account Balance does not change.
For instance, the trailing max draw down for a 3 Contract account is $1500. That means your account cannot drop below a loss of $1500 including fees, commissions, et al and is calculated from your account balance high.
This stop continues trailing. Once the trader exceeds the account profit target, the stop will continue to trail i.e. if a trader meets the profit target but then the trade/account dips back below, the stop will continue to trail.
- Traders - with this type of stop, it will trail infinitely, so once you have exceeded the profit target, keep an eye on your trail if you have not met the minimum 10 days of trading because the stop will continue to trail.
The trailing max draw down is to help you evaluate your trading plan in current market conditions and prepare you for trading a live account where self-discipline, risk management and trading-plan-reflection is key to success and reminds traders.
We chose an aggressive trail during the evaluation phase - instead of one that stops at break even - because we truly want traders who can manage risk and where managing risk is always at their forefront.
Once in a live account the trailing stop is relaxed and once the trailing stop moves just above break even (please see below for more info) it does not move again so the Trader has full opportunity to grow the account in a way he/she desires.
Tracking: Traders can, and should, track this intra-trade in the column Auto Liquidate Threshold and Auto Liquidate Max Min Account Balance in R|Trader’s Trader Dashboard. The Auto Liquidate Threshold Value will update, not the Minimum Account Balance. This style of trailing balance encourages traders to take profit and to NOT give back to the market - Continue to grow your account!
- *We cannot stress enough the importance of the R|Trader Dashboard. Please use it and get familiar with it. Please note that the Closed profit/loss (which is the first thing traders see when they open the Dashboard) does not included commissions (you can set commissions within your platform). Also, please view Performance in R|Trader in which traders will find the Net P&L for the day.
Limited Trailing Minimum Account Balance, Explained to you by a Leeloo Trader
Each Evaluation Subscription plan has a specific max drawdown amount. For example, the (Up to12 Contract) account, which is also $100,000.. has a max draw down of $3000.
This means that the max you can lose is $3000 from the highest profit point that your account reaches at any moment.
For example, you begin the first day with $100,000.. and the max you can lose is $3000 or a low of $97,000. You place your first trade and the active trade is in profit $600.. your max drawdown always TRAILS the profit peak in real time.. so now the max drawdown is $97,600. ($100,600- $3000 = $97,600). However.. you have not closed the trade yet.. and by the time you close the trade you only made $100 profit. Your max drawdown remains at $97,600- even though you only have $100,100 in the account. (because at one time during an active trade you reached a peak of $100,600). The max drawdown always trails by $3000 from the highest point. This is why, during the evaluation phase, you need to try and take profit as best you can when presented the opportunity.
Limited Trailing Minimum Account Balance, Once in Performance Account
Once you qualify and are trading inside a Performance Account, you no longer have to worry about the trail once it crosses the initial balance of the account because the max drawdown stops trailing forever once your account reaches Break Even + $100. So once the max drawdown is $100,100.. it no longer moves any higher.
You can always monitor what your real time max drawdown level is in the Rithmic Trader Dashboard. Open RTrader, scroll to the far right side of the screen, and you can see the Auto Liquidate Threshold Value (ALT).