The Maximum Loss Limit increases as the account reaches new equity highs. It will never decrease and is ultimately capped at the initial account balance.

The Maximum Loss Limit increases as the account reaches new equity highs. It will never decrease and is ultimately capped at the initial account balance.

Example

  • Initial account balance: $100,000
  • Maximum Loss Limit: 5%
  • Initial loss limit: $100,000 × (100% − 5%) = $95,000
  • When the account equity reaches $102,000, the Maximum Loss Limit is adjusted to: $102,000 × (100% − 5%) = $96,900
  • If the account equity falls to $96,900, a Maximum Loss Limit breach occurs and the account will be considered failed
  • When the account equity reaches $106,000, the Maximum Loss Limit would move to: $106,000 × (100% − 5%) = $100,700

Since $100,700 exceeds the initial account balance, the Maximum Loss Limit will be locked at $100,000 and will not increase further.