Greeting Traders and welcome back. Today we are going to explain exactly
what the end of day drawdown rule is as well as how it differs
from a regular trailing drawdown and you might find
that the end of day drawdown is a little bit more up to your speed
than the trailing drawdown as we proceed, but without further ado
let's switch on over to the site and begin our journey.
If we go to the Gauntlet Mini home page and we scroll down
to the account options section, we'll see that on the left-hand column
there's something that says EOD drawdown that is the
end of day drawdown. This is where you'll find the various EOD drawdowns
that are permitted for each account option
with the $25,000 account for example, it is $1,500
but if we go to the $150,00 over here we'll notice that it is $4,500.
What this number is to us as a trader and why we need to understand it,
this is the most amount of money that our account can fall backwards
from the highest point it's closed at on any given trading day
hence the name "end of day drawdown."
if it's still confusing to imagine in your head don't worry, we're going to
go over to an easy to understand animational video here in just a moment
but if you forget anything in this video and you want to see
what the end of day drawdown limits are this is an easy way to do it,
but remember folks the end of day drawdown pegs itself at the starting account balance
that means that the $1,500 amount that we see here, that naturally is going to be
$1,500 less than $25,000 in a starting scenario
but as that account grows to say $26,500
the end of day drawdown is gonna get stuck right there at that $25,000 mark
but also, if you don't remember things from videos, like I do,
and you need to check things out on paper just scroll to the bottom
of the screen where you'll notice that we have something that says
"what is the end of day drawdown" and you can click here to learn more
and if you click here, you will in fact learn more, with examples provided to you.
Let's move over to the example that I was talking about, that animational video
to make it click a little bit more as far as how it differs from
the trailing drawdown of old.
Let's first start off with a refresher on the trailing drawdown concept.
With the trailing drawdown, we'll imagine that we have a $100,000 starting account.
This means that we have a $3,500 trailing drawdown.
That means that the minimum account balance would be $96,500.
If our account balance were to rise to $102,500 representing $2,500 increase
then our minimum account balance would also rise $2,500 to $99,000.
However, the minimum account balance will not decrease
if our account balance then drops from this point,
even if we were to close our trades at $102,000.
Despite the fact that we had already been at $102,500
our minimum account balance will still reflect the climb to $102,500.
On day two, let's say our minimum account balance is still sitting at $99,000
because we haven't traded again since day one.
If our account drops to $101,000 total
our minimum account balance doesn't change because our account balance
still has yet to climb above $102,500.
On day three, if our account balance were to rise to $103,000, setting a new high,
our minimum account balance is also going to rise by $500 because it is $500 higher
Than the highest point our account had achieved before,
so now our minimum account balance would be at $99,500.
On day four, we'll say that we hit $105,000. This is great news
because our account is going up and it's also great news because
the minimum account balance is going to stop rising at $100,000 because
it will never rise above our starting account balance.
From day 5 onward the idea would be to keep building our account
to avoid breaking the rule and we'll be on track to passing our Gauntlet Mini.
Now let's focus on the end of day drawdown.
Let's use the same concept of having a $100,000 starting account with a $3,500 drawdown.
In this case, it's going to be an end of day drawdown.
That means that our minimum account balance will start at $96,500.
If we end the day with $102,000, even if we've been higher than that,
our minimum account balance is only going to rise to $98,500
because it's based on that end of day close.
So, on day two our minimum account balance will start at $98,500
if our account balance ends up below $102,000 at the end of the trading day
the minimum balance is not going to rise but it's also not going to decrease
On day three, if our account balance closes at $103,000
now our minimum account balance will rise by the $1,000 increase that we just experienced.
That means our minimum account balance will begin at $99,500 the next day.
On day four, if our account balance closes above $103,500
then our minimum account balance will not rise above $100,000 the next day
due to the fact that it will never rise higher than the initial starting account balance.
On day five, now that we're in the free and clear
and our end of day drawdown is capped at the starting account balance
it's up to us to continue pushing our account forward and higher and higher
as we continue to build our trading account.