How it works, what it means, and what to do if it’s triggered.
OVERVIEW – this example is for One Phase Clarity, on IF Micro Clarity the Account Drawdown is 1.5% as stated on the rules page.
What is account drawdown?
Account drawdown is a live safety measure that watches the floating equity across all your open positions. The moment your unrealised losses exceed 2% of your starting balance, the system steps in and closes everything automatically.
This isn’t a penalty — it’s a circuit breaker. It caps how far a bad session can run before the damage compounds further.
First violation. If the drawdown limit is hit, your positions are closed and your account moves to a 50% profit split going forward. Your account stays active — this is your second chance.
Second violation. Breaching drawdown a second time closes the account permanently. A new challenge or evaluation would be required to trade again.
EXAMPLES
Seeing it in practice
The two scenarios below illustrate how drawdown plays out at different account sizes and what the consequences are at each stage.
| Scenario 1 $10,000 account — first violation | |
| Starting balance | $10,000 |
| 2% threshold | $200 |
| Floating loss at trigger | −$200 |
| Positions closed? | Yes, automatically |
| Account status | Active — profit split moves to 50% |
| What happens: The market moved sharply against several open positions. Once the combined unrealised loss hit $200, all trades were closed automatically. No further action needed from the trader — but the profit split changes going forward. | |
| Scenario 2 $50,000 account — second violation | |
| Starting balance | $50,000 |
| 2% threshold | $1,000 |
| Floating loss at trigger | −$1,000 |
| Positions closed? | Yes, automatically |
| Account status | Permanently breached |
| What happens: After the first breach, the trader continued under the 50% split but let floating losses reach $1,000 again. This second trigger permanently closes the account — a new evaluation is the only path back. | |
COMMON QUESTIONS
Frequently asked
What is account drawdown?
Drawdown tracks the floating PnL across all your open positions in real time — meaning it updates continuously as the market moves, not just when a trade is closed.
What is the drawdown limit?
Your account has a 2% drawdown limit based on your starting balance. Once unrealised losses on open positions hit that level, your positions are closed automatically to cap the damage.
What happens the first time I hit the limit?
Your open positions are closed and your profit split moves to 50% going forward. Think of it as a reset — the account stays active, but you take a smaller share of future gains until trust is rebuilt.
What exactly is ‘floating PnL’?
It’s the live, unrealised profit or loss on trades you haven’t closed yet. It shifts second by second with the market, which is why drawdown can be triggered even if you haven’t manually exited anything.
What if it happens a second time?
A second breach means the account is permanently closed. There’s no further second chance — you’d need to start a fresh evaluation to trade again.
Does the 2% reset at the start of each day?
No. It’s always measured against your original starting balance, so the same dollar threshold applies every day regardless of how previous sessions went.
Does closed-trade loss count toward drawdown?
No. Only the live floating equity on open positions is tracked. Losses from trades you’ve already closed are separate and don’t contribute to the drawdown calculation.
