Balance Trailing Maximum Loss Limit

How the Balance Trailing Maximum Loss works — a trailing drawdown that follows your balance high watermark

The Balance Trailing Maximum Loss is a trailing drawdown limit used on some of our models. It follows your balance upward as your account grows and never moves down, except when a payout is deducted.

How it works

The Balance Trailing Max Loss is set as a percentage below your balance high watermark (HWM) — the highest balance your account has ever recorded. Because the HWM is based on balance (not equity), open positions and intraday equity swings don't move it. Only when a winning trade closes and pushes the balance to a new high does the trailing limit step up.

If your balance or equity falls below the trailing limit at any point, the account is breached.

Calculating the limit

You don't need to calculate the limit yourself — it's calculated in real time and shown on your dashboard.

The formula is:

Balance Trailing Max Loss = HWM − (HWM × your Max Loss percentage)

What happens at payout

When you request a payout, the withdrawal amount is deducted from the balance high watermark. The trailing limit is then recalculated from the new high watermark, so the full drawdown buffer is preserved after the payout — withdrawing profits doesn't eat into your trading room.

Examples

These examples use an 8% allowance.

Example 1 — Closing a profitable position

Your initial balance is $100,000, so your starting Balance Trailing Max Loss is:

$100,000 − ($100,000 × 0.08) = $92,000

You close your first trade with a $500 profit, lifting the balance high watermark to $100,500. The new trailing limit is:

$100,500 − ($100,500 × 0.08) = $92,460

Your account can now lose up to $8,040 from the new high watermark before being breached.

Example 2 — Receiving a payout

Your balance high watermark is $104,000, so your trailing limit sits at:

$104,000 − ($104,000 × 0.08) = $95,680

You withdraw a $3,000 payout. The withdrawal is deducted from the high watermark, which becomes $101,000, and the trailing limit is recalculated:

$101,000 − ($101,000 × 0.08) = $92,920

The trailing limit moves down from $95,680 to $92,920, preserving the full 8% buffer against the new high watermark.

Frequently asked questions

Does the high watermark move with floating equity?

No. The high watermark only moves when your balance reaches a new all-time high. Floating profit on open positions does not lift the trailing limit.

Can I increase my Balance Trailing Max Loss?

Yes, in two ways:

Reach Rank 2 in the Experience Program to add 1% to your allowance.
Purchase the Extra Max Loss Add-On at checkout to increase your allowance on a per-account basis.

Does the high watermark go down if I lose money?

No. The high watermark only ever moves upward as new closed-balance highs are recorded, or downward when a payout is deducted. Losses never reduce the high watermark — they reduce the buffer between your current balance/equity and the trailing limit.

Can I be breached while still above my starting balance?

Yes. Because the trailing limit moves up with each new balance high, a sharp drawdown after a strong run can take you below the trailing limit even if you're still above your initial starting balance.

Where can I see my current Balance Trailing Max Loss?

It's displayed in real time on your PipFarm Dashboard.

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