The maximum drawdown begins at 6% below your starting balance and adjusts upward as your closed balance reaches new highs (known as the high-water mark). If your equity falls below this level at any time, the account will be closed.
Once you achieve a 6% gain based on your closed balance, the drawdown locks at your original starting balance. From that point forward, it will no longer move up, giving you the freedom to compound profits without further drawdown adjustments.
Example with a $100,000 starting balance:
Starting drawdown: $94,000
Reach $104,000 closed balance → new drawdown is $98,000
Reach $106,000 closed balance → drawdown locks at $100,000
Reach $110,000 closed balance → drawdown remains locked at $100,000
This structure is designed to protect risk while allowing traders to grow their accounts sustainably.