{"id":1825,"date":"2023-01-12T13:04:11","date_gmt":"2023-01-12T18:04:11","guid":{"rendered":"https:\/\/tradingfunder.com\/?p=1825"},"modified":"2024-10-28T06:28:01","modified_gmt":"2024-10-28T10:28:01","slug":"uprofit-pro-drawdown-explained-easy-to-understand","status":"publish","type":"post","link":"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/","title":{"rendered":"Uprofit Pro Drawdown Explained: Easy To Understand"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>Drawdown refers to a decline or reduction, particularly in the context of financial markets, where it represents the worst sequence of cumulative losses. Specifically, it measures the largest drop from the peak to the trough on a return curve.<\/p>\n\n\n\n<p>Prop firms, as our team at Trading Funder has observed, frequently use drawdown in their funded trading programs to assess the maximum loss a trader can sustain. This metric also helps these firms gauge the volatility that a trader\u2019s capital has undergone before reaching their ultimate trading objectives.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#Trailing_Drawdown_vs_EOD_Drawdown\" title=\"Trailing Drawdown vs EOD Drawdown\">Trailing Drawdown vs EOD Drawdown<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#What_does_a_trailing_drawdown_mean\" title=\"What does a trailing drawdown mean?\">What does a trailing drawdown mean?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#What_does_EOD_drawdown_mean\" title=\"What does EOD drawdown mean?\">What does EOD drawdown mean?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#How_does_the_Pro_drawdown_work_at_Uprofit\" title=\"How does the Pro drawdown work at Uprofit?\">How does the Pro drawdown work at Uprofit?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#Example_of_how_the_Pro_drawdown_works_at_Uprofit\" title=\"Example of how the Pro drawdown works at Uprofit\">Example of how the Pro drawdown works at Uprofit<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#Questions_and_answers_about_the_Uprofit_Pro_Drawdown\" title=\"Questions and answers about the Uprofit Pro Drawdown\">Questions and answers about the Uprofit Pro Drawdown<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#When_does_the_Drawdown_stop_trailing\" title=\"When does the Drawdown stop trailing?\">When does the Drawdown stop trailing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#Will_I_lose_my_account_if_I_reach_the_Pro_Drawdown\" title=\"Will I lose my account if I reach the Pro Drawdown?\">Will I lose my account if I reach the Pro Drawdown?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#I_didnt_reach_the_Pro_Drawdown_but_my_account_was_liquidated_Why\" title=\"I didn\u2019t reach the Pro Drawdown, but my account was liquidated! Why?\">I didn\u2019t reach the Pro Drawdown, but my account was liquidated! Why?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#Summary\" title=\"Summary\">Summary<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Trailing_Drawdown_vs_EOD_Drawdown\"><\/span>Trailing Drawdown vs EOD Drawdown<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_a_trailing_drawdown_mean\"><\/span>What does a trailing drawdown mean?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A trailing drawdown can be defined as a stop loss that is assigned to a trading account and is continuously moving. It could also be used to refer to a moving value that determines the minimum account balance that a trader is allowed to have at any point of operating the trading account.<\/p>\n\n\n\n<p>The peculiar thing about the trailing drawdown is that it is not static but constantly moving during trades. This is why if the trader\u2019s account balance is equal to or less than the minimum balance allowed by the trailing drawdown, such an account will be terminated.<\/p>\n\n\n\n<p>The trailing drawdown is always moving relative to the highest account balance at any point of the trading day. So, the more a trader makes profits, the higher the value of the trailing drawdown. But when the trader incurs losses, the trailing drawdown remains unchanged.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_EOD_drawdown_mean\"><\/span>What does EOD drawdown mean?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The EOD drawdown is similar to the trailing drawdown except that it is only calculated at the end of a trading day, hence the name EOD which means \u201cend of day\u201d. It is not calculated during trades or at the end of trades like the trailing drawdown which is why it is different. This is the trailing drawdown used by Uprofit proprietary firm and it is known as Pro Drawdown.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_the_Pro_drawdown_work_at_Uprofit\"><\/span>How does the Pro drawdown work at Uprofit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As mentioned earlier, the Pro drawdown at Uprofit works like the EOD drawdown which is why it only considers the profits made once a trading day comes to an end. Also, it is updated any time the trader\u2019s account balance achieves a new high at the end of any trading day.<\/p>\n\n\n\n<p>Uprofit adopts this method of calculating the drawdown to ensure that its traders can trade freely and make the most of the trading opportunities available. Traders can do this without worrying about a trailing drawdown that will consider both earned and unearned profits as the Pro drawdown only considers the profits earned at the end of the trading day.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example_of_how_the_Pro_drawdown_works_at_Uprofit\"><\/span>Example of how the Pro drawdown works at Uprofit<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For this example, we will assume the trader is trading with a 100K account with a Pro drawdown of $3,000. We will examine how the Pro drawdown is calculated for successive days of trading.<\/p>\n\n\n\n<p><strong>Day 1:<\/strong> the trader has an open position balance of $100,700 but then closes the position with a balance of $100,000. The Pro drawdown at the end of the trading day is thus $97,000.<\/p>\n\n\n\n<p><strong>Day 2:<\/strong> the trader has an open position balance of $100,900, but he didn\u2019t take that profit, he even made losses, then closed the position with a balance of $98,500. The Pro drawdown at the end of the trading day remains $97,000.<\/p>\n\n\n\n<p><strong>Day 3:<\/strong> the trader abstains from making any trades and so closes with the same balance from the previous day at $98,500 which means the Pro drawdown is still the same at $97,000.<\/p>\n\n\n\n<p><strong>Day 4:<\/strong> at some point during the trading day, the trader has an open position with an account balance of $103,000. But by the time the position is closed, the account balance is $100,000. The Pro drawdown at the end of the trading day is still $97,000.<\/p>\n\n\n\n<p><strong>Day 5:<\/strong> at some point during the trading day, the trader has an open position with an account balance of $104,000, but then ends up closing the position with a balance of $103,000. The trader\u2019s Pro drawdown is thus $100,000 at the end of the trading day.<\/p>\n\n\n\n<p>From the above example, it is clear that the Pro drawdown does not consider the potential profits but only the actual profits at the end of the day.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Questions_and_answers_about_the_Uprofit_Pro_Drawdown\"><\/span>Questions and answers about the Uprofit Pro Drawdown<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_does_the_Drawdown_stop_trailing\"><\/span>When does the Drawdown stop trailing?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The drawdown stops trailing when the drawdown limit reaches the initial balance either in the challenge or in the funded account.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Will_I_lose_my_account_if_I_reach_the_Pro_Drawdown\"><\/span>Will I lose my account if I reach the Pro Drawdown?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Yes, you will lose your account if you reach the Pro drawdown. This is because once your account balance reaches or goes below the Pro drawdown, the account will be liquidated and closed. It is not allowed for a trader\u2019s account balance to experience a loss that is beyond the Pro drawdown at any point during the trading day.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"I_didnt_reach_the_Pro_Drawdown_but_my_account_was_liquidated_Why\"><\/span>I didn\u2019t reach the Pro Drawdown, but my account was liquidated! Why?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If this should happen, that means you have violated the daily loss limit rule. The daily loss limit rule refers to the highest amount of loss that a trader is allowed to suffer for any specific trading day.<\/p>\n\n\n\n<p>All the different account sizes have a daily loss limit assigned to them and traders are expected to abide by this rule. Sometimes, traders fail to pay attention to this rule and as such they find their accounts liquidated. The rule is there to ensure that traders are disciplined and adopt excellent risk management strategies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Summary\"><\/span>Summary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Drawdown measures are critical in funded trading programs to ensure that traders manage risk effectively. At Trading Funder, we emphasize the importance of understanding the two main types of drawdowns: Trailing Drawdown and End of Day (EOD) Drawdown. A <strong>Trailing Drawdown<\/strong> continuously tracks a trader\u2019s highest balance, adjusting the allowed loss threshold during active trades. In contrast, an <strong>EOD Drawdown<\/strong>, like Uprofit\u2019s <strong>Pro Drawdown<\/strong>, only adjusts at the close of a trading day, offering more flexibility. Uprofit\u2019s Pro Drawdown allows traders to focus on actual profits at day\u2019s end without worrying about intraday fluctuations. However, reaching this drawdown will result in account closure, so careful risk management is essential for success.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Drawdown refers to a decline or reduction, particularly in the context of financial markets, where it represents the worst sequence of cumulative losses. Specifically, it measures the largest drop from the peak to the trough on a return curve. Prop firms, as our team at Trading Funder has observed, frequently use drawdown in their funded &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Uprofit Pro Drawdown Explained: Easy To Understand\" class=\"read-more button\" href=\"https:\/\/tradingfunder.com\/uprofit-pro-drawdown-explained-easy-to-understand\/#more-1825\" aria-label=\"Read more about Uprofit Pro Drawdown Explained: Easy To Understand\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":30338,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"Uprofit Pro Drawdown Explained: Easy To Understand","_seopress_titles_desc":"The Pro drawdown ensure traders maintain discipline while trading. Uprofit allows traders to monitor their Pro drawdown via the trading dashboard","_seopress_robots_index":"","footnotes":""},"categories":[142],"tags":[],"class_list":["post-1825","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uprofit","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"_links":{"self":[{"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/posts\/1825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/comments?post=1825"}],"version-history":[{"count":0,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/posts\/1825\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/media\/30338"}],"wp:attachment":[{"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/media?parent=1825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/categories?post=1825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradingfunder.com\/wp-json\/wp\/v2\/tags?post=1825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}