Earn2Trade starting in July 2021 made a great change to their draw down rule for traders. The short version – your trailing draw down is now updated at the end of the day, NOT during each trade. Read on traders.
As well they are running a great sale in July 2021 with 40% off ALL evaluations. Normally just 1 account size is on sale each month, so this gives you the flexibility to get any of them. I’m currently in the $150K as I write this (mid July 2021).
Trailing Draw Downs Explained First
Let’s understand trailing draw downs first before getting to the sub-level of why an End of Day is better than an Intra Day.
A trailing draw down is an amount that you can not lose, and if you do so you would be breaking a rule. So for example, in the $150K Gauntlet Mini the Draw Down is $4,500. You can always find this information on their main page for the various account sizes.
Side note, the prices shown below are the 40% off July 2021 sale.
So Day 1 $150,000 account starting balance, you could lose up to $4,500 before you’ve broken a rule (there’s a bit more to this actually when you factor in daily loss limits also, but lets just focus on Trailing Draw Down).
When you make profits, lets say you do a trade and get to $151,000, a “Trailing Draw Down” gets pulled up by $1,000 also. So now your minimum balance went from $145,500 to $146,500.
Trailing draw downs never go down, only get pulled up. As you reach new profit highs, the drawdown is pulled up.
Continuing the example, lets say your next trade is a $2,000 winner. Your draw down is now pulled up $2,000 more, and your balance is now $153,000. Your draw down balance is $148,500.
But alas your next trade is a loser, $2,000. Your balance is $151,000. Your draw down doesn’t move, and your minimum balance before breaking a rule is still $148,500. Remember, draw downs never get lower, only get pulled up.
So to reflect at this point your balance is $151,000, your minimum balance is $148,500, or a buffer of 2,500. Makes sense right? You have an initial $4,500 draw down, you pulled it up some with the winners, but the $2,000 loss made you back track towards it, and now you only have $2,500 in buffer.
One last point – draw downs stop at your initial balance. So once you surpass $154,500 in profit, your draw down will be pulled up to $150,000 but never go higher. So when you are at $156,000 for example, your draw down remains at $150,000.
Intraday Drawdowns (The Old Way)
So in the past your drawdown would be updated during each trade. The example above is very much the same, and all the above could happen in the course of 1 day previously. You could have a big winner, pull your draw down upwards, then have a big loser and back track all in the course of a day.
Where this would hurt people is those who trade very volatile markets. The drawdown is pulled up by open P&L. Say you went long, a trade shoots up to where you’d be $3,000 in profit, but immediately turns around and comes down, and you exit taking only $1,500 in profit. Well unfortunately, the $3,000 it reached is what will be reflected in your draw down. Again, this is the old methodology just so you have a basis to compare.
End of Day Drawdown – The New Better Way
As mentioned in July 2021 Earn2Trade changed how they calculate the draw down and it is far, far better for traders.
Instead of your drawdown balance being calculated during each trade, it now isn’t touched until after the day has ended. You can have as many ups and downs as you like all day, what matters is your ending balance.
So for example, you start with $150,000. Trade 1 is a $3,000 winner. Trade 2 is a $2,000 loser. You end the day at $151,000.
Previously, your draw down would have been pulled up intraday, so from $145,500 to $148,500.
Now, your draw down wasn’t impacted by that big winner to start. Your ending balance is $151,000, your drawdown is based on that and is now $146,500.
Effectively, that $2,000 swing in the example didn’t hurt your draw down now. Great right!
One last thing – the new End of Day Drawdown rule applies to the Evaluations, and to the LiveSim accounts. Funded accounts do still have a normal intra-trade trailing draw down, at least as of July 2021. Always be sure to read the rules on their site as things change over time and I might not always update the info timely.
The rule change has been really well received from what I’ve seen people saying, and myself 100% agree. I’ve been victim myself to the “have a big winner followed by a big loser” and it hurts your draw down, but no more. You have a fixed balance you know you can’t fall below for the day and that is that.
Video About It
Earn2Trade Discord: https://discord.gg/earn2trade
Unrelated to the above but I wanted to share here as well –
Earn2Trade started a Discord server and it’s great. I had been considering opening my own Discord server, but honestly didn’t want the obligation of maintaining it, participating regularly, moderating it and all the other work that goes into running a Discord server.
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