# Trailing Drawdown

Managing your risk is important when trading. One key rule is **trailing drawdown**, which helps monitor your losses.

It might sound complex, but it's actually pretty straightforward. **Drawdown** refers to the changes between the highest and lowest points on a return curve, representing a series of accumulated losses.  

When we say **trailing**, it means that the drawdown levels change as the market changes. They adapt to the current conditions - it "trails" behind your gains.

**TRAILING DRAWDOWN** is a limit that adjusts based on the growth of your trading account or your positive performance. If your account balance decreases due to trading losses, the trailing drawdown limit remains fixed at the highest balance in your account.

| **Account Type** | **Drawdown Limit** |
| :--------------: | :----------------: |
|        25k       |        $1500       |
|        50k       |        $2500       |
|       100k       |        $3000       |

1. During the Challenge, it's crucial to keep in mind that the trailing drawdown will continuously increase as your account's threshold is determined by the highest point reached and the unrealized profit per trade.
2. Once you transition to Performance, things take a slight twist. Now, your account's drawdown will come to a halt at the initial balance of the account. This nifty mechanism will serve as a valuable tool and allow you to effectively manage your trading risks while aiming for profits.

### **Drawdown Computation**

#### Formula:

Now, let’s talk about the calculation process. We use a simple formula to determine your account threshold or minimum account balance:

{% hint style="info" %}
Highest Unrealized Profit Value - Trailing Drawdown Limit = Account Threshold or Minimum Account Balance
{% endhint %}

#### Sample Scenario**:**

* Let's walk through a sample scenario to illustrate this. Imagine you're trading with a **100K Expert Account**, and your **drawdown limit is $3,000**. By following the formula, we’re able to determine that the account threshold for the 100K Pro is $97,000. We just have to subtract the drawdown limit from the initial balance ($100,000 - $3,000 = $97,000)
* Now, let's say you make a $1,000 profit and close the position. Your balance rises to $101,000, and your threshold is now $98,000.
* In your next trade, you reach an account balance of $102,000, BUT you didn't close the position until your balance fell to $101,500. In this case, your threshold would be $99,000.

| **Trading**        | **Opening Position Balance** | **Highest Unrealized Profit Value** | **Closing Position Balance** | **Trailing Drawdown Limit** | **Account Threshold** |
| ------------------ | ---------------------------- | ----------------------------------- | ---------------------------- | --------------------------- | --------------------- |
| Starting Position  | $100,000                     | -                                   | -                            | $3000                       | $97,000               |
| 1st trade position | $100,000                     | $101,000                            | $101,000                     | $3000                       | $98,000               |
| 2nd trade position | $101,000                     | $102,000                            | $101,500                     | $3000                       | $99,000 (formula)     |

As you can see, your account threshold will always be based on the highest reached and unrealized profit per trade. This is why monitoring your progress R|Trader Pro and staying informed about your trades is important.

### Find Your Minimum Account Balance

The easiest way to monitor your minimum account balance is through **R|Trader Pro and Membership Dashboard.**

### R|Trader Pro

Once you're all set up on R|Trader Pro, you can customize your Trader's Dashboard to match your trading style. You can even prioritize the views to show the information you use the most!

So, here's how to find your minimum account balance:

1. Go to your **Trader's Dashboard** and right-click anywhere on the column titles. Select **'Add/Remove Columns'** from the options that pop up.
2. Look for **'Auto Liquidate Threshold'** and check the box to add it as a column on your R|Trader Dashboard.
3. The value you will see under the **'Auto Liquidate Threshold'** field is your **Minimum Account Balance.**
4. Once you’ve added the **“Auto Liquidate Threshold”** field, feel free to rearrange your columns to suit your preferences.

### Membership Dashboard

1. To view your updated Auto Liquidate Threshold Value, simply log in to your Membership Dashboard and navigate to the 'Accounts' section.
2. Within 'Accounts,' locate the ALT (Auto Liquidate Threshold) Tab. There, you'll find your recently updated Auto Liquidate Threshold Value displayed prominently for your convenience. 

   <figure><img src="/files/GMbIuNZaGbGc3UkWyGEh" alt=""><figcaption></figcaption></figure>


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