<\/span><\/h2>\n\n\n\nOption 1 is known as the No Scaling Account<\/strong> and focuses exclusively on the trailing drawdown. Below are the essential points to note about Option 1:<\/p>\n\n\n\n\n- The trailing drawdown is directly attached to the current balance, equal to the trader’s profit.<\/li>\n\n\n\n
- The drawdown is measured in real-time over the trading day with the addition of a commission.<\/li>\n\n\n\n
- If a trader violates the allowable drawdown, the administrator will have no choice but to close down the trader’s Master Account, and the trader will have to start again from the beginning.<\/li>\n<\/ul>\n\n\n\n
Let us look at the example below to gain a better understanding.<\/p>\n\n\n\n
Suppose a trader operates the $100,000 account with 12 contracts and a maximum trailing drawdown of $3,000. This indicates that $3,000 is the maximum loss the trader can incur from the highest profit point at any particular time, including open positions. Therefore, if the account balance should ever drop to $97,000, the trader will lose this Master Account.<\/p>\n\n\n\n
If the trader begins trading and makes a profit of $800 on the first trade, the new drawdown is $97,800 ($100,800 \u2013 $3,000). If the trader continues to trade and then loses $300 from the profit made earlier, after which the trade is closed, the account balance falls from $100,800 to $100,500. However, the maximum drawdown will not change from $97,800 as the maximum drawdown will only move $3,000 from the highest account balance.<\/p>\n\n\n\n
<\/span>Option 2<\/strong><\/span><\/h2>\n\n\n\nOption 2 is known as the EOD Drawdown Account<\/strong>, and it features End of the day Drawdown, a Scaling Plan, <\/em>and a Daily Loss Limit<\/em>.<\/p>\n\n\n\n<\/span>End of the day Drawdown (EOD)<\/strong><\/span><\/h3>\n\n\n\nEOD is updated once a trading day ends, which is why it only considers the profit made once a trading day ends. Thus, it is updated when a trader’s account attains a new high value at the end of the trading day. The EOD moves in accordance with the trader’s account balance, which is equal to the profit. The example below clarifies this.<\/p>\n\n\n\n
This example will go with the $100,000 account, just like in the example for Option 1. This means the maximum trailing drawdown is $3,000, and the account balance must not drop to $97,000; the EOD follows a similar principle. This example will evaluate the trader’s trading activities across three trading days.<\/p>\n\n\n\n
First trading day<\/strong><\/p>\n\n\n\nThe trader makes a couple of winning and losing trades. By the time the trading day ends, the account balance stops at $101,000. EOD balance is thus adjusted to $98,000.<\/p>\n\n\n\n
Second trading day<\/strong><\/p>\n\n\n\nThe account balance by the time the trading day ends is $100,500, which is a drop from the previous day’s. However, the EOD balance will remain unchanged at $98,000.<\/p>\n\n\n\n
Third trading day<\/strong><\/p>\n\n\n\nWhen the third trading day closes, the account balance shoots up to $102,000, which means there will be a new EOD balance of $99,000.<\/p>\n\n\n\n
You should note that once the EOD reaches the initial account balance, the EOD will stop moving.<\/p>\n\n\n\n