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Knight Challenge (One-Step Challenge)
Understanding Max Daily and Total Drawdown in the Knight Challenge
Understanding Max Daily and Total Drawdown in the Knight Challenge

Comprehensive Look at Max Daily Drawdowns and Max Total Drawdowns in the Knight Challenge

Updated yesterday

Virtual Daily Drawdown

Maximum Virtual Daily Loss | 3% (4% with Drawdown Add-On)

  • In the course of one working day, the maximum daily drawdown on the account (which consists of the simulated account’s current result of opened positions and the result of positions closed on the given day) must not exceed 3% of the account's initial balance. If you purchased the Drawdown add-on, it grants you a 4% max daily drawdown. Please note this includes simulated commissions and swap fees.

Note: We also utilize a reconciliation module that reviews breaches the following day to add an additional layer of verification for any breach activity.

Reset Time

  • The max daily drawdown resets every day between 4:57 PM - 5:03 PM EST . To ensure smooth functionality, we advise our simulated traders to not execute trades in between the window of 4:57 PM - 5:03 PM EST when the drawdown is being reset. Once your last virtual balance/equity (whichever is higher) is pulled for the trading day your dashboard will update with your new Daily Breach Level. This is the amount your account equity must stay above in order to not be breached.

Overall Drawdown

Relative Drawdown | 6% (7% with Drawdown Add-On)

  • The maximum total drawdown is trailing 6% of the account balance unless you purchased the Drawdown add-on, which grants you a 7% max total drawdown.

  • Once the trader reaches an account balance or equity that is equal to or higher then the amount of max drawdown they have then the overall drawdown is locked in at the original demo account balance.

  • Please note that the drawdown is calculated based on PnL to include both open and closed positions, as well as simulated commissions and swaps.

  • Note: When you make a withdrawal from the simulated funded account it reduces the virtual Relative Drawdown by the same amount. For example, if your Simulated account is at $107,000 and you withdraw $5,000. You will only have a $2,000 simulated drawdown left to trade as the account has simulated relative drawdown.

Examples

  • Example 1: No Drawdown Add-On
    If you start with a simulated $100,000 account your max overall loss will be set at 6% ($6,000). This means that if your account should go below $94,000 in equity at any given time you will be in violation.

  • Example 2: With Drawdown Add-On

    If you start with a simulated $100,000 account your max overall loss will be set at 7% ($7,000). This means that if your account should go below $93,000 in equity at any given time you will be in violation.

  • Example 3: No Drawdown Add-On
    If your simulated account balance or equity reaches $105,000, your relative drawdown will be set at $105,000 - $6,000 = $99,000. This means your account should not go below $99,000 in equity or balance at any given time.

  • Example 4: With Drawdown Add-On

    If your simulated account balance or equity reaches $105,000, your relative drawdown will be set at $105,000 - $7,000 = $98,000. This means your account should not go below $98,000 in equity or balance at any given time.

  • Example 5: No Drawdown Add-On
    If your simulated account balance reaches anything above $106,000, your relative drawdown will be locked in at $100,000. This means your account should never go below $100,000 in equity or balance at any given time.

  • Example 6: With Drawdown Add-On
    If your simulated account balance reaches anything above $107,000, your relative drawdown will be locked in at $100,000. This means your account should never go below $100,000 in equity or balance at any given time.

  • Example 7: No Drawdown Add-On
    If your simulated account balance reaches $110,000, your relative drawdown will still be locked in at $100,000, giving you a 10% overall drawdown amount on the account.

  • Example 8: With Drawdown Add-On
    If your simulated account balance reaches $110,000, your relative drawdown will still be locked in at $100,000, giving you a 10% overall drawdown amount on the account.

  • Example 9: No Drawdown Add-On
    If your simulated account balance increases to $106,000, your relative drawdown will be fixed at $100,000. Therefore, if your account experiences a simulated drawdown the next day, reducing your balance or equity to $103,500, your simulated relative drawdown will continue to be recorded as $100,000.

  • Example 10: With Drawdown Add-On
    If your simulated account balance increases to $107,000, your relative drawdown will be fixed at $100,000. Therefore, if your account experiences a simulated drawdown the next day, reducing your balance or equity to $104,500, your simulated relative drawdown will continue to be recorded as $100,000.

Note: We also utilize a reconciliation module that reviews breaches the following day to add an additional layer of verification for any breach activity.

Violations

  • Any violation of the rules above will result in the termination of your TFT trading account and you will not be eligible to move forward in the program with that account.

  • Note: Both the daily drawdown and max drawdown breach on an account include simulated commissions, swap fees and dividends (only on ThinkMarkets) as well.

    • All active ThinkMarkets & Eightcap accounts will be transitioned to DXTrade by February 27th, 5PM EST. These customers should close their trades by 4 PM EST on February 26th, 2024. Failure to do so will result in trades being automatically closed or liquidated to facilitate a seamless transition to DXTrade.

Our outsourced system, on a regular cadence, gathers the required tick data from our Trading Platform provider to calculate drawdown violations. Real-time equity tracking is not technologically feasible and thus what is displayed on the dashboard is provided 'as-is' and solely for informational purposes. Therefore, we deploy a proprietary reconciliation system intended to identify discrepancies in account drawdown calculations. This reconciliation system runs each day, using the prior periods data, to identify drawdown violations. Based on reconciliation system results, TFT may in its sole discretion undertake and execute the rejection of payouts if the drawdown violation occurred prior to a payout request, termination of funded or challenge accounts identified to have violated their drawdown in a prior period, and termination of funded or challenge accounts that were upgraded, merged, or scaled from a funded or challenge account that violated their drawdown parameters. TFT exercises its right to take and implement without prior notice one or more of the firm actions referenced above, in accordance with our customer agreement and Terms of Use.


For Knight Challenge Phase 1 and as well as TFT Funded Accounts, are routed through a simulated feed, therefore simulating real market conditions. A payout means you are paid based on data which is measured by simulated profit.

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