Simulated Loss - Drawdown
At Funded Trading Plus, we believe that effective risk management is essential to successful trading. Understanding how drawdown works is a key part of managing risk. We offer two types of drawdown structures across our programs: Static Drawdown and Relative Drawdown. Each type serves a different purpose and is tailored to suit various trading styles and trading personalities.
Our research relies upon trading strategies that operate within certain parameters of risk. We set each drawdown threshold to experiment with different variables within a simulated-live environment. This is to determine approaches towards risk management that have the capacity to generate profit.
What is Drawdown?
Drawdown is the maximum decline in a simulated account’s balance from a peak or otherwise defined level. It is often used to measure risk tolerance and the effectiveness of trading strategies. It is important to manage drawdown well to protect capital and create a sustainable trading approach. Just as it is the case in real markets, it is equally as important for your accounts that use simulated funds.
We’ll explain both Static Drawdown and Relative Drawdown in detail below to help you understand how they apply to each of our programs.