What are the Drawdown and Total Loss rules at Alpha Trader Firm?
At Alpha Trader Firm, our drawdown and total loss rules are designed to promote effective risk management and safeguard both the traders and the company. Here’s a breakdown of how these limits work:
Daily Drawdown Limit
• *6% Daily Drawdown:* The daily drawdown limit is set at 6% of the higher value between your starting day’s virtual balance or virtual equity.
EXAMPLE :
If your starting balance is $100,000 and your equity is $105,000, your maximum daily drawdown will be $6,300 (6% of $105,000). Similarly, if your starting balance is $110,000 and your equity is $108,000, your maximum drawdown would be $6,600 (6% of $110,000).
*Key Rule:* - If your account's drawdown exceeds this 6% limit during the trading day, your challenge will be automatically terminated.
Consequences of Breaching the Drawdown Rule
Hard Breach: Breaching the 6% drawdown rule is considered a hard breach. If this limit is breached, the system will terminate the challenge immediately.
Total Loss Limit (Static)
• *11% Total Loss Limit:* This limit is set at 11% of your initial starting balance or equity and remains static throughout the challenge, regardless of account growth or decline.
EXAMPLE:
If your starting balance is $100,000, your total loss limit is $11,000. If your balance drops to $89,000, you will have hit this limit, resulting in automatic account termination.
*Key Rule:* - Once your total losses exceed 11% of your initial balance or equity, your account will be automatically closed.
Importance of the Rules
These rules are crucial for maintaining disciplined trading and protecting your account from excessive losses. By setting clear drawdown limits, we help ensure that traders do not take on undue risk that could jeopardize their trading performance and overall account stability.
Monitoring and Enforcement
Our systems continuously monitor your account to ensure compliance with the Daily 6% Drawdown Rule and the total 11% loss limit. If either limit is breached, appropriate actions will be taken in accordance with our risk management policies.
If you have any questions or need further clarification regarding the Daily 6% Drawdown Rule or the total loss limit, please contact our support team. We appreciate your understanding and cooperation in following these rules to maintain a healthy trading environment.