Maximum Trailing Drawdown (MTD)

The Maximum Trailing Drawdown (MTD) is a balance-based risk limit used only in the 1-Step Challenge. It’s designed to protect your account from large losses while allowing room for growth.

🔷 How Does the Trailing Drawdown Work?

The MTD is set at 5% of the Initial Account Balance calculated from the highest account balance achieved.

Once your balance reaches a new high, your drawdown limit moves up with it.

It is based on your balance, not equity, so open trades don’t affect it unless closed.

Prop firms also refer to it as Max Relative Drawdown.

🔷 How Is The Max Trailing Drawdown Calculated?

• Max Trailing Drawdown (MTD) = Initial Account Balance x 5% 
• Stop Out Level (SOL) = Highest Account Balance minus MTD

Example: 

Initial Balance: $100,000

• • Starting MTD = 5% of $100,000 = $5,000
  • Stopout Level = $100,000 – $5,000 = $95,000

If your balance grows to $101,000:

• • New Stopout Level = $101,000 – $5,000 = $96,000

👉 If your balance or equity drops to $96,000, the account is disqualified.