Drawdown and risk limits
Breach
Any violation of an account's published rules. Breaches are graded: a soft one triggers corrective action, a hard one fails the account. The word is used for both, which is why the grade matters more than the term.
Also called: Account breach · Blown account
GFN’s figure
GFN grades breaches: a soft breach may close a trade or trigger corrective action, while a hard breach - usually the daily loss limit or maximum drawdown - fails the account and ends its payout eligibility.
- Risk breaches
- Daily loss limit, maximum drawdown
- Conduct breaches
- Prohibited trading, account sharing, coordinated trading
- Effect on payouts
- A breached funded account is not eligible for payout
In detail
Breach,explained
Breaches divide into risk breaches, which are numeric and automatic, and conduct breaches, which are reviewed. A risk breach is decided by the dashboard; a conduct breach - coordinated trading, account sharing, exploiting a pricing error - is decided by a person looking at the account.
The rules that governed the account when it was purchased are the ones it is judged against, so the published handbook at the date of purchase is the reference rather than a newer promotion.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Hard breach
A violation serious enough to fail or terminate the account immediately. Exceeding the daily loss limit or the maximum drawdown is the usual cause, and a later recovery in the market does not reverse it.
Soft breach
A rule violation that triggers corrective action - a position closed, a warning, a review - without failing the account outright. The account survives, but the trade or the profit attached to it may not.
Prohibited trading
Activity a firm bans because it targets the trading environment rather than the market. It covers exploiting errors and pricing delays, coordinated trading between accounts, and third-party account management.
Payout denial
A refused payout request. The common causes are a breach recorded before the payout was approved, incomplete identity verification, a mismatch in the receiving account, or trading that broke a conduct rule.
Free retake
A second attempt at an evaluation included in the original fee, granted after a hard breach. It is not a free first attempt - the evaluation was paid for - and its rules are often tighter than the original.
Also governed by /rules/breach-and-what-happens
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