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Understanding the Trailing Drawdown: Leeloo, Earn2Trade, UProfit

Understanding the Trailing Drawdown

Funded account providers like Leeloo, Earn2Trade or UProfit have various rules implemented that traders need to respect. Depending on the provider those rules may differ, however, one rule they all have in common is the trailing drawdown. This parameter plays a key role with all accounts and the following article takes a closer look on that topic illustrating how the various providers handle their trailing drawdown.

Originally, the term “trailing drawdown” was created by the funded account providers themselves to have a name for their implement parameter. It describes an automatically adjusting stop loss for the trading account that is never moving down. If that stop loss gets hit the trading account will be eliminated.

If a trader keeps a $100k trading account, it usually comes with a trailing drawdown around $3k. At that point, the account balance is $100k and the trailing drawdown stop loss is at $97k ($100k – $3k). If the trader executes a $2k profit trade, both the account balance moves up to $102k ($100k + $2k) and the trailing drawdown moves up to $99k ($97k + $2k). However, if the trader now executes a $1k loss trade, only the account balance moves down to $101k ($102 - $1k) – the trailing drawdown stop loss does not move lower and remains at its $99k level. The trailing drawdown continues moving up as soon as the trader exceeds the initial $3k difference between the account balance and trailing drawdown balance.

Trailing Drawdown

The trailing drawdown has been implemented by the account providers to check a trader’s consistency and, ultimately, become a funded trader. It plays a crucial role in passing an evaluation and must be respected in the individual trading plan. The trailing drawdown will stop at certain account balance depending on the provider.

Leeloo Trailing Drawdown

The funded account provider Leeloo utilises an intraday calculation of their trailing drawdown which means the drawdown is adjusted in real-time including unrealised profits.

Leeloo allows a max. drawdown of $3k with their $100k account, consequently, the initial drawdown level is $97k. If a trader executes a trade that spikes up at an unrealised peak profit of $2k but is closed with a final profit of $1k the account balance moves up to $101k, however, since the unrealised intraday profit was already at $2k the trailing drawdown level moves up to $99k.

The trailing drawdown remains valid through the entire evaluation and will never stop during this phase. Once switched to a funded account, the trailing drawdown stops at the initial account balance +$100. In the above example that would be as soon as the trailing drawdown reaches the threshold of $100,100.

In addition, Leeloo offers the account type “Glide” respectively “Accelerator” which is the only account option among the funded account providers