Maximum drawdown is the limit on the whole account rather than the day. Without it a trader could lose a little every day indefinitely and never technically breach anything. It is the rule that decides how long a losing run can go on, which makes it the number worth knowing before the run starts rather than during it.
Risk limits
Maximum drawdown,and where it stops you.
Maximum drawdown is the total loss an account may take before it is closed. It is 5% on Instant and 8% on 1 Step and 2 Step, which is $5,000 or $8,000 on a $100,000 simulated account. It is measured on equity, so an open position can breach it.
The rule
What is maximum drawdown?
Percentages are what the industry publishes. These are the same rules in dollars, worked on a $100,000 simulated account, so there is nothing left to convert.
- Instant max drawdown5% of $100,000
- $5,000
Trailing. The floor starts at $95,000 and follows new equity highs upward.
- 1 Step max drawdown8% of $100,000
- $8,000
The floor starts at $92,000 and trails $8,000 below your equity high. Once equity peaks at $108,000 the floor reaches your $100,000 starting balance and locks there - it does not trail past it. Rises to 10% ($10,000) with the optional drawdown add-on at checkout.
- 2 Step max drawdown8% of $100,000
- $8,000
Non-trailing. The floor is fixed at $92,000 however far into profit you run.
- 2 Step free retake4% of $100,000
- $4,000
Half the room of a first attempt.
- Measured on
- Equity
Open positions count. A floating loss can breach the account before you close it.
Plan applicability
Which programmesthis rule applies to
Our three programmes do not share one rulebook. This table is the part of the page to read before you buy.
- InstantApplies
5% trailing ($5,000)
Starts at $95,000 on a $100,000 account and trails your equity high upward.
- 1 StepApplies
8% trailing, locks at starting balance ($8,000)
The floor starts at $92,000 and trails $8,000 below your equity high. Once equity peaks at $108,000 the floor reaches your $100,000 starting balance and locks there - it does not trail past it. 8% is standard; 10% needs the optional add-on at checkout.
- 2 StepApplies
8% fixed ($8,000)
Never trails. The stop-out level sits at $92,000 from day one and stays there.
Why it exists
The reasoning,stated plainly
Worked example
The same rule,as a number
A $100,000 simulated account, because that is the size most people are deciding about.
The same 8% on two programmes
Both the 1 Step and the 2 Step publish 8%. What the figure does once you are in profit is not the same.
- 2 Step floor at $100,000
- $92,000
Fixed. It does not move.
- 2 Step floor after a $10,000 run
- $92,000
Still fixed. Your cushion is now $18,000 rather than $8,000.
- Instant floor at $100,000
- $95,000
Trailing, and only $5,000 below the start.
- Instant floor after a $6,000 run
- $101,000
The floor has followed the equity high up.
A trailing drawdown protects gains you have already made and tightens the account as you profit. A fixed one gives you more room the further you run. Neither is better in the abstract - they suit different traders, which is why we publish both.
Commonly misread
What tradersget wrong here
Every item below has cost somebody an account. They are published for that reason rather than for completeness.
“A new trading day clears it”
It does not. The daily loss limit resets each day; maximum drawdown is cumulative over the life of the account.
“Profits later on cancel an earlier breach”
A hard breach is recorded at the moment the level is crossed. Recovering afterwards does not reverse it.
“Only closed trades matter”
The measurement is on equity. An open position in drawdown can breach the account before you have closed anything.
The full cluster
Every questionabout this rule
The answers our support team works from, each on its own page.
What is Maximum Drawdown?
Maximum Drawdown is the total amount your account is permitted to decline before the account is breached.
Is Maximum Drawdown the same on every GFN plan?
No. Different plans can use different Maximum Drawdown limits and calculation methods.
Can open positions cause a Maximum Drawdown breach?
Yes. Account equity matters when monitoring trading risk.
What happens if the account touches the Maximum Drawdown level?
If your account reaches or exceeds the defined hard breach limit according to the program's calculation method, the account can be breached.
Can profitable trades offset a previous breach?
No. Once a hard breach has occurred, a later market recovery does not undo it.
Does a new day mean yesterday's losses disappear from my overall drawdown?
No. The Daily Loss Limit and Maximum Drawdown are separate rules - the daily calculation resets while your overall drawdown position does not.
Related rules
The rulesthat sit next to this one
What is trailing drawdown?
A trailing drawdown follows your equity high upward. Instant uses 5% trailing - $5,000 on a $100,000 account. The 2 Step drawdown never trails.
What is static, non-trailing drawdown?
The 2 Step uses a 8% non-trailing drawdown: the stop-out level sits at $92,000 on a $100,000 account and never moves.
What is the daily loss limit?
The daily loss limit is 3% on Instant and 5% on 1 Step and 2 Step - $3,000 or $5,000 on a $100,000 simulated account.
Can I hold trades overnight and over the weekend?
Overnight and weekend holding is permitted on all three programmes where the account and the underlying market allow it. Gap risk stays with the trader.
Instant: the full rule sheet
Every objective on the Instant programme, in dollars, at all six account sizes.
1 Step: the full rule sheet
Every objective on the 1 Step programme, in dollars, at all six account sizes.
2 Step: the full rule sheet
Every objective on the 2 Step programme, in dollars, at all six account sizes.
Ready when you are
Your capital stays yours.The risk is ours.
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Payouts every 14 days
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