--- title: "Equity-based drawdown Meaning - Get Funded Now" description: "A drawdown measured against live account equity, which includes the unrealised profit and loss of every open position. The breach level can be touched…" url: "https://getfundednow.com/glossary/equity-based-drawdown" language: "en" last_modified: "2026-09-22" publisher: "Get Funded Now (getfundednow.com)" translations: es: "https://getfundednow.com/es/glossary/equity-based-drawdown" pt-BR: "https://getfundednow.com/pt-br/glossary/equity-based-drawdown" fr: "https://getfundednow.com/fr/glossary/equity-based-drawdown" it: "https://getfundednow.com/it/glossary/equity-based-drawdown" de: "https://getfundednow.com/de/glossary/equity-based-drawdown" disclosure: "All trading at Get Funded Now is simulated. 'Funded' means a simulated or virtual account; GFN is not a broker and does not hold client funds." --- Drawdown and risk limits # Equity-based drawdown A drawdown measured against live account equity, which includes the unrealised profit and loss of every open position. The breach level can be touched while a trade is still running, before anything is closed. GFN’s figure Every GFN risk limit is monitored against account equity. Open positions can breach an account before they are closed, and a later recovery does not reverse a breach that has already happened. - **Instant Daily loss limit**: 3% on equity - **1 Step and 2 Step Daily loss limit**: 5% on equity - **Recovery after a breach**: Does not reverse it In detail ## Equity-based drawdown, explained Equity-based measurement is why a trader can breach an account without ever taking a loss on paper. A position that spikes against you intraday and recovers by the close still touched the limit on the way through, and a recovery does not reverse a breach that has already been recorded. It also means trading costs matter more than they look. Commission and spread come out of equity the moment a position opens, so a trade is already slightly underwater before the market has moved at all. Worked example A $100,000 1 Step account carrying an open position $5,000 underwater has already reached the 5% daily loss limit, even though nothing has been closed. [The rule in full →](https://getfundednow.com/rules/daily-loss-limit) · [Rules handbook](https://getfundednow.com/rules) · [More drawdown and risk limits](https://getfundednow.com/glossary/category/drawdown) Related ## Terms that come with it Most rules only make sense next to the ones they interact with. These are the entries this one depends on. - [Balance-based drawdown](https://getfundednow.com/glossary/balance-based-drawdown) - A drawdown measured against closed balance rather than live equity. Floating losses on open positions do not move the breach level; only realised results do, once a trade is closed. - [Daily loss limit](https://getfundednow.com/glossary/daily-loss-limit) - The most an account may lose in one trading day before it breaches. Calculated as a percentage of the previous day's closing level, it resets at a fixed time each day and is the rule that ends most evaluations. - [Hard breach](https://getfundednow.com/glossary/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. - [Intraday drawdown](https://getfundednow.com/glossary/intraday-drawdown) - The worst point an account reaches during a single trading day, measured from that day's starting level. It is what a daily loss limit monitored on equity actually tests, rather than where the day happens to finish. - [Maximum adverse excursion](https://getfundednow.com/glossary/maximum-adverse-excursion) - The furthest a trade moves against you before it closes, whatever its final result. Measured per trade, it shows how much room a strategy genuinely needs rather than how much it eventually used. Also governed by [/rules/daily-loss-limit](https://getfundednow.com/rules/daily-loss-limit) [End-of-day drawdown](https://getfundednow.com/glossary/end-of-day-drawdown) · [Drawdown reset](https://getfundednow.com/glossary/drawdown-reset) · [Rollover time](https://getfundednow.com/glossary/rollover-time) Ready when you are ## Your capital stays yours. The risk is ours. One evaluation fee, no time limits and up to 90% of simulated profits. Pick an account size and your credentials arrive by email within minutes. [Start your challenge →](https://getfundednow.com/challenges) · [Read the rules](https://getfundednow.com/faq) No subscriptions or hidden fees Payouts every 14 days $400,000 max total allocation --- Source: https://getfundednow.com/glossary/equity-based-drawdown Facts about Get Funded Now in one file: https://getfundednow.com/llms.txt