Initial Balance Registration:
The system records the Start Balance at the beginning of the challenge.
This value serves as a reference to calculate the 10% Overall Drawdown.
Disqualification Level Calculation:
A Disqualification Equity Threshold is set, which is:
Start Balance - 10% of the Start Balance.
If the equity falls below this level at any point, the account will be disqualified.
Real-Time Monitoring:
The system continuously tracks the equity.
If the disqualification level is reached, the system:
Closes all open positions.
Disables the account.
Sends an email notification with the resolution details.
Note: In this example, the trader never exceeded the 5% Daily Drawdown, indicating proper risk management. However, after several losing trades, they reached the 10% Overall Drawdown, resulting in disqualification.
Formula to Calculate Overall Drawdown
Total Loss Calculation:
Final Equity - Initial Balance = Result
Drawdown Percentage Calculation:
(Result * 100) / Initial Balance = % Drawdown
