Drawdown Calculations
Exactly how the 3% daily trailing drawdown and 7% static max drawdown work, with numerical examples for every account size.
What It Means
Drawdown limits are the most important rules to understand in any prop firm challenge. They determine how much you can lose before your challenge is failed. Albatrix Funded uses two separate drawdown limits: a daily trailing drawdown of 3% and a static max drawdown of 7%. These two limits work simultaneously, and you must respect both at all times. The lower of the two limits at any given moment is the one that constrains your trading.
Static Max Drawdown (7%)
The static max drawdown is calculated from your initial account balance at the start of each phase. It does not move or trail — it remains fixed at 7% below your starting balance for the entire duration of that phase. For a $10,000 account, the static floor is $9,300. Your equity can never fall below this level at any point, whether intraday or at market close. If your equity drops to $9,300.01, you are still within the limit. If it touches $9,300 or lower, the challenge is failed.
The static drawdown applies to the initial balance only. If you start Phase 1 of a $50K challenge with $50,000, the static floor is $46,500 for the entire phase — even if you grow your account to $55,000. After passing Phase 1, your account resets for Phase 2, and the static floor is recalculated from the new starting balance.
Daily Trailing Drawdown (3%)
The daily trailing drawdown is calculated from the previous day's closing equity. At the end of each trading day, your account equity is recorded. The next trading day, your equity cannot fall below 97% of that recorded closing value at any point. This means the daily drawdown floor trails upward when you make profits and stays level when you break even. It never trails downward — losses do not lower the floor for the same day.
For example, on a $10K account, if you close Day 1 at $10,300, your Day 2 daily drawdown floor is $9,991 (97% of $10,300). If you close Day 2 at $10,150, your Day 3 daily floor is $9,845.50 (97% of $10,150). The floor resets each day based on the new closing equity, so yesterday's daily limit no longer applies.
Which Limit Applies?
At any given moment, the effective drawdown limit is the higher of the two floors (closer to your current equity). If your equity trails up significantly, the static drawdown becomes the binding constraint. If you are near your starting balance, the daily drawdown is usually the tighter limit.
Drawdown Limits by Account Size
Here are the exact dollar values for each account size:
| Feature | $5K | $10K | $25K | $50K | $100K |
|---|---|---|---|---|---|
| Starting Balance | $5,000 | $10,000 | $25,000 | $50,000 | $100,000 |
| Daily Drawdown (3%) | $150 | $300 | $750 | $1,500 | $3,000 |
| Max Drawdown (7%) | $350 | $700 | $1,750 | $3,500 | $7,000 |
| Static Floor | $4,650 | $9,300 | $23,250 | $46,500 | $93,000 |
How They Interact
The two limits work independently but simultaneously. Here is a detailed walkthrough on a $25K account:
Day 1: Start at $25,000. Daily floor is $24,250 (trailing from start). Static floor is $23,250. The daily floor is higher, so it is the binding limit. You close Day 1 at $25,500.
Day 2: Daily floor trails to $24,735 (97% of $25,500). Static floor remains $23,250. You close Day 2 at $25,200.
Day 3: Daily floor is $24,444 (97% of $25,200). Static floor stays $23,250. You have a bad day and equity drops to $24,000 — this breaches the $24,444 daily floor. Challenge failed.
In this example, the daily drawdown was breached even though the static drawdown was never approached. This is why the daily trailing drawdown is often the more dangerous limit — it tightens when you are profitable and punishes large single-day losses.
What Happens on a Breach
If either drawdown limit is breached at any point — even intraday — the challenge is immediately failed. There are no warnings, no partial resets, and no second chances for that attempt. The challenge fee is forfeited, and you can purchase a new challenge to start over. If you breach on the funded account, the account is closed and profit splits for that period are forfeited.
Allowed Examples
On a $50K account, you close Day 1 at $51,000. Day 2's daily floor is $49,470. Your equity drops to $49,500 intraday but recovers to $50,500 by close. You never breached any limit.
The daily floor was respected intraday (equity stayed above $49,470) and the static floor was never approached. This is a valid trading day.
You grow a $10K account to $11,000 over several days. Your daily floor has trailed up to approximately $10,670. Even if you lose $600 in a day, the daily floor of $10,670 is still above the static floor of $9,300. You are safe.
Profitable trading gives you more buffer on the daily drawdown because it trails upward, while the static floor remains far below.
Violation Examples
On a $5K account, your equity drops to $4,640 intraday. The static floor is $4,650. This is a breach even if you recover by close.
The static max drawdown is an absolute barrier. Touching $4,650 or below at any point — even for a second — fails the challenge.
You close at $10,500 on a $10K account. Next day your equity falls to $10,100. The daily floor is $10,185 (97% of $10,500). You breached by $85.
The daily trailing drawdown resets each day based on the previous close. Your large profitable day raised the floor, and the subsequent loss breached it.