Help CenterThe “Max Absolute Drawdown” (MAD) is a pre-determined dollar amount representing the maximum allowed loss from your initial account balance on any given day.
1-Step Evaluation
The MAD is 6% of the Initial Account Balance. So, your losses should never surpass a 6% max loss of your initial account balance.
MAD = 6% x Initial Account Balance
The Stopout Level (SOL) is then calculated by deducting the MAD from the Initial Account Balance:
SOL = Initial Account Balance – (6% x Initial Account Balance)
For example, if your initial account balance is $80,000.
The MAD would be $80,000 x 6% = $4,800.
The SOL would then be $80,000 – $4,800 = $75,200.
2-Step Challenge
The MAD is 10% of the Initial Account Balance. So, your losses should never surpass a 10% max loss of your initial account balance.
MAD = 10% x Initial Account Balance
The Stopout Level (SOL) is then calculated by deducting the MAD from the Initial Account Balance:
SOL = Initial Account Balance – (10% x Initial Account Balance)
For example, if your initial account balance is $100,000.
The MAD would be $100,000 x 10% = $10,000.
The SOL would then be $100,000 – $10,000 = $90,000.