# DrawDown Explained

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Nexgen ProTrader Funding is committed to helping traders succeed because when you win, we win, too. Nexgen ProTrader Funding uses the profit or loss of closed trades to calculate your maximum drawdown level on every account type, evaluation, and each of the semi-live or live accounts. \
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\&#xNAN;**( Sim/Live Account ) Drawdown Stops At The Account Buffer Level + $100 Ex. Formula:** Starting Balance + Drawdown + $100 = Drawdown Lock Level.

**Drawdown will not go beyond this level for the life of the account, allowing you to trade larger sizes.**
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**Drawdown Lock = When the drawdown will&#x20;*****stop*****&#x20;trailing your account, once you have achieved enough equity in the account.**
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<table><thead><tr><th align="center">Account Size</th><th align="center">Drawdown Must Reach</th><th width="348" align="center">Account Balance To Trigger Drawdown Lock</th></tr></thead><tbody><tr><td align="center">$25,000</td><td align="center">$26,850.00</td><td align="center">$28,600.00</td></tr><tr><td align="center">$50,000</td><td align="center">$52,350.00</td><td align="center">$54,600.00</td></tr><tr><td align="center">$75,000</td><td align="center">$77,850.00</td><td align="center">$80,600.00</td></tr><tr><td align="center">$100,000</td><td align="center">$103,400.00</td><td align="center">$106,700.00</td></tr><tr><td align="center">$150,000</td><td align="center">$154,900.00</td><td align="center">$159,700.00</td></tr></tbody></table>

### How Drawdown Works: $50,000 Example

**"Closed Out Trade Drawdown Definition":** A drawdown that is calculated after each closed trade. After each trade, when you make new equity highs, the drawdown will trail up. If you are not making new equity highs, the drawdown will remain the same until new equity highs are achieved.&#x20;

How does it work? If you're **up $1,300** in an open trade but only lock in **$1,000** when you close it, your maximum drawdown will increase by that $ 1000 **"closed out trade profit"**. &#x20;

Example of Trailing Drawdown and Termination of Trailing Drawdown on any non-evaluation account over 10 days/trades to illustrate trailing drawdown and when a drawdown will stop trailing.&#x20;

Start your trading day with a $50,000 account and a maximum drawdown of $2,250.&#x20;

<table><thead><tr><th width="130" align="center">Days Traded</th><th width="184" align="center">Net Profit/Loss</th><th width="179" align="center">Account Balance</th><th width="241" align="center">Drawdown Level</th></tr></thead><tbody><tr><td align="center">Day 1</td><td align="center">$1000</td><td align="center">$51,000</td><td align="center">$48750</td></tr><tr><td align="center">Day 2</td><td align="center">$1000</td><td align="center">$52,000</td><td align="center">$49750</td></tr><tr><td align="center">Day 3</td><td align="center">$1000</td><td align="center">$53,000</td><td align="center">$50750</td></tr><tr><td align="center">Day 4</td><td align="center"><mark style="color:red;"><strong>$-1200</strong></mark></td><td align="center"><mark style="color:red;"><strong>$51,800</strong></mark></td><td align="center"><mark style="color:red;"><strong>$50,750</strong></mark></td></tr><tr><td align="center">Day 5</td><td align="center">$1000</td><td align="center">$52,800</td><td align="center">$50,750</td></tr><tr><td align="center">Day 6</td><td align="center">$1000</td><td align="center">$53,800</td><td align="center">$51,550</td></tr><tr><td align="center">Day 7</td><td align="center">$1000</td><td align="center">$54,800</td><td align="center">$52,350</td></tr><tr><td align="center">Day 8</td><td align="center">$1000</td><td align="center">$55,800</td><td align="center">$52,350</td></tr><tr><td align="center">Day 9</td><td align="center">$1000</td><td align="center">$56,800</td><td align="center">$52,350</td></tr><tr><td align="center">Day 10</td><td align="center">$1000</td><td align="center">$57,800</td><td align="center">$52,350</td></tr></tbody></table>

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The graph below plots the account balance and the drawdown cutoff level. Notice that once the drawdown line crosses the drawdown lock point, the drawdown will no longer trail, regardless of how much profit is in the account.&#x20;

<figure><img src="https://2636332553-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F3FnRB6oJhS05myXA0IrA%2Fuploads%2F1STM7EYjchc2P6PVDvZp%2Fimage.png?alt=media&#x26;token=e10581cd-2f4b-4337-8811-b686afaa0357" alt=""><figcaption></figcaption></figure>

{% hint style="info" %} <mark style="color:yellow;">Note:</mark> Drawdowns **do not move backward** when you take a withdrawal, so be mindful of how much you remove when making a withdrawal. A large withdrawal may leave your drawdown closer to your current drawdown level than you desire, reducing your available buffer and putting your account at risk. Below is a chart that shows you how a drawdown will go up during the day. \
\ <mark style="color:yellow;">**If you exceed the maximum drawdown during a trade, the system will automatically liquidate your positions. You will not be allowed to hold a position beyond the maximum drawdown level in any account.**</mark>
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To access **trade-by-trade details**, click on a **specific trading day** from the daily performance overview. Selecting a trading day opens an **intra-day statistics view**, where performance is broken down **trade by trade**.

<figure><img src="https://2636332553-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F3FnRB6oJhS05myXA0IrA%2Fuploads%2F1nGNrPPnt9V49bYxPPcO%2Fimage.png?alt=media&#x26;token=38e01ab8-9f42-4103-8ce5-671c88a82043" alt=""><figcaption></figcaption></figure>

<figure><img src="https://2636332553-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F3FnRB6oJhS05myXA0IrA%2Fuploads%2FWALnU4X2eCl6pty4A5eo%2Fimage.png?alt=media&#x26;token=19f731a4-8efc-4c94-af15-8c3a98cc2963" alt=""><figcaption></figcaption></figure>

<figure><img src="https://2636332553-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F3FnRB6oJhS05myXA0IrA%2Fuploads%2FG1CCEt5eRN2gG4UObPyg%2Fimage.png?alt=media&#x26;token=fb2092cf-a637-489c-93c2-87f0f75b5f64" alt=""><figcaption></figcaption></figure>

### **Key Drawdown Points To Remember**

* Your maximum drawdown updates only when you close a winning trade that sets a new equity high. Losing trades do not move the drawdown level.
* If you exceed the maximum drawdown during a trade, the system will automatically liquidate your positions. You will not be allowed to hold a position beyond the maximum drawdown level in any account.
* After liquidation, you must purchase a reset to continue trading immediately, or Evaluation accounts reset automatically every 30 days while your subscription is active.
* **Sim/Live Accounts** do not allow resets. If you fail, you must restart from the evaluation phase.

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