You must exercise discipline to succeed as a futures trader. You need the proper implementation of basic essential elements of trade to make profits long-term in the market. Trading without a sufficient amount of experience is one of the reasons many traders lose money.
Traders must know how to properly manage their risk and control emotion to be successful. Because the market can sometimes have wild swings that can put your trading capital at serious risk, proper knowledge of risk management techniques is essential for succeeding in the futures market.
What does the trailing drawdown mean?
The trailing drawdown rule is a risk management technique that OneUp Trader and the funding partners implement to help re-emphasized to their traders the need for proper money management both during the evaluation process and when an individual starts to trade with a funded account. You can follow this video link to get more information.
The trailing drawdown, also known as the auto-liquidate threshold value trails a specific amount based on the account size you choose for your evaluation. Larger accounts mean bigger drawdown and more room to trade with.
Illustrating how Trailing Drawdown works
For example, with the 100,000 dollar account, the trailing drawdown or auto-liquidate threshold value will trail the highest value of your account balance until it reaches your initial starting balance, and from there, it will not move again, no matter how much profit you make.
Another example is when you’re using the 50,000 dollars evaluation account, the auto-liquidate threshold value or the drawdown starts at 47,500 dollars.
If you take your first trade and it runs with you 1,000 dollars, your drawdown will trail up that same amount since your balance is making a new high. Your new level will be 48,500 dollars.
If you take your next trade, which immediately results in 1,000 dollars loss, your drawdown remains at 48,500 dollars now, and your balance remains 50,000 dollars.
Bear in mind that only once you reach your last high at 51,000 dollars that the drawdown will begin to trail again. Once the drawdown has trailed like this and move up to 50,000 dollars, it won’t trail up any longer.
How do I locate the trailing drawdown on the OneUp Trader dashboard?
Follow the steps below to find the auto-liquidate value and constantly keep track of your drawdown value:
Step 1: Open RTrader.
Step 2: Go to the trader dashboard on the left-hand side. This will bring up a window with your account statistics.
Step 3; Scroll to the far right-hand side, and you’ll find the column for auto liquidate threshold value.
The significance of the trailing drawdown value
For proper risk management, make sure that your account balance doesn’t drop below this number during your evaluation period.
The funding partners implement the trailing drawdown rules to ensure that traders who they’ll fund will demonstrate that they are capable of properly managing their risks.
So, during your evaluation period, you need to constantly keep an eye on your trailing drawdown or auto-liquidate threshold value. This will show that you’re maintaining discipline money management.
It equally demonstrates to the funding partners that you can properly manage risk when your pass evaluation and begin to trade with a funded life account. You can find out more about OneUp Trader’s Trailing drawdown rules by clicking on this video link.