Drawdown Rules Explained – Flex Challenge
How the static maximum drawdown and the funded daily drawdown work, and why the Flex model only has one limit during evaluation
The Flex Challenge uses two drawdown limits, and only one of them applies while you are evaluating:
Maximum overall drawdown of 5%, which applies on every phase, including funded.
Daily drawdown of 2.5%, which applies on the funded account only.
During Phase 1 and Phase 2 there is no daily loss limit at all. There is one number to track, and it does not move.
Key Concepts
Concept | Details |
Static | The maximum drawdown is measured against your initial balance and never changes. It does not trail your profits upward. |
Where it applies | The 5% maximum applies in Phase 1, Phase 2 and on the funded account. The 2.5% daily limit applies only once funded. |
Basis | Both limits are calculated from the initial account balance, not from your current balance. |
Consequence | Breaching either limit fails the account. |
Maximum Overall Drawdown (All Phases)
Your maximum drawdown is 5% of your initial balance. This produces a fixed equity floor that stays in the same place for the life of the account.
Account Size | $10K | $25K | $50K | $100K |
Max drawdown (5%) | $500 | $1,250 | $2,500 | $5,000 |
Equity floor | $9,500 | $23,750 | $47,500 | $95,000 |
Why "static" matters
Example (on a $100,000 account):
Initial balance: $100,000
Maximum drawdown: 5% = $5,000
Equity floor: $95,000
You trade the account up to $118,000. Your equity floor is still $95,000. A trailing drawdown would have followed your profits up to $113,000; a static one does not. You keep the full $18,000 of room you built.
Daily Drawdown (Funded Accounts Only)
Once funded, a daily drawdown of 2.5% of the initial balance applies. It resets at 5 PM EST.
Account Size | $10K | $25K | $50K | $100K |
Daily drawdown (2.5%) | $250 | $625 | $1,250 | $2,500 |
Example (on a $100,000 funded account):
Daily drawdown: 2.5% = $2,500
Balance at the 5 PM EST reset: $104,000
Minimum equity allowed until the next reset: $101,500
If your equity falls below that figure at any point during the day, the account is considered failed. The 5% static maximum still applies alongside it, so your equity may also never fall below $95,000.
Summary
Rule | Phase 1 | Phase 2 | Funded |
Daily Drawdown | None | None | 2.5% of initial balance |
Max Overall Drawdown | 5% static | 5% static | 5% static |
Trails your profits? | No | No | No |
Resets? | N/A | N/A | Daily at 5 PM EST |
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