Max Absolute Drawdown (MAD)

Absolute Drawdown — also known as Static Drawdown or Fixed Drawdown — is the maximum amount your account is allowed to lose from its initial balance.

This type of drawdown is used in CTI’s:

✅ 2-Step Challenge = 10% of Initial Balance.

✅ Instant Funding = 6% of Initial Balance.

✅ Instant Funding Pro = 6% of Initial Balance.

In these programs, your drawdown limit never moves, no matter how much profit you make. That’s why it’s called “static.”

🔷 Do We Use Balance or Equity for Drawdown?

This is where it’s important to be clear:

• We measure the drawdown limit based on your initial balance (not equity).

• But your trades will be closed and your account will be stopped out if your equity (balance + floating losses) drops below the maximum allowed loss level.

So even though we use your balance to set the drawdown limit, your open (floating) losses do count toward your stop-out condition.

🔷 Quick Definitions:

• Balance = Your account value from closed trades only.
• Equity = Balance +/- floating profits or losses from open trades.
• Max Absolute Drawdown (MAD) = Fixed % of starting balance.
• Stop Out Level (SOL) = Starting Balance - MAD (this is where your account is closed if equity falls below it).

🔷 How Is the Max Absolute Drawdown Calculated? 

• Max Absolute Drawdown (MAD): 10% of your initial balance

• Stopout Level (SOL): Your starting balance minus the MAD

Example: If your starting balance is $100,000:

• • MAD = 10% = $10,000

  • SOL = $100,000 - $10,000 = $90,000

If your equity (including floating losses) drops below $90,000, your account will be closed — even if you haven’t closed those losing trades.

This is a risk control rule that all prop firms use to protect the account from blowing up.