Loss Limits at True Forex Funds

In the dynamic world of trading, managing risk effectively is crucial. That’s where the concept of ‘loss limits’ becomes vital. Loss limits, also known as drawdowns, are pre-set levels that signal the maximum amount a trader is willing to lose either in a single day (Max Daily Loss) or over the entire trading period (Max Overall Loss). Implementing loss limits helps you control the risk associated with trading, providing a safety net against substantial losses.

These limits are particularly beneficial for new traders, serving as a guiding tool to manage risk and encourage discipline. By setting a clear boundary on potential losses with Max Daily Loss and Max Overall Loss, our traders at True Forex Funds can focus on building and executing their strategies without the stress of potentially unlimited losses.

At True Forex Funds, we offer multiple programs to suit the diverse needs of our traders. While our traditional model, the “Two Phase Evaluation,” has specific loss limits, we’ve recently introduced our “One Phase Funding” challenge that offers its own set of limits tailored for traders seeking a different challenge.

One Phase Funding challenge Loss Limits:

Max Overall Loss (6%)

In this challenge, your equity can’t decline by more than 6% of your initial deposit during the entire 30 trading day period. For an account with a $100,000 deposit, the equity should never drop below $94,000.

Max Daily Loss (3%)

Here, your starting equity for the day, beginning at 0:00 Central European Time (CET), can’t fall by more than 3% of the initial deposit within a single day. The calculation and reset mechanism are similar to the Two Phase Evaluation, adjusting for the 3% limit.

Max Overall Loss Limits and Max Daily Loss Limits in our Two Phase Evaluation model:

Max Overall Loss (10%)

In a nutshell, this means your equity can’t decline by more than 10% of your initial deposit during the entire trading period. If we look at an account with a $100,000 deposit, for instance, the equity should never drop below $90,000.

Max Daily Loss (5%)

This limit means your starting equity for the day, starting at 0:00 Central European Time (CET), can’t fall by more than 5% of the initial deposit within a single day.

How do we calculate this?

We check your equity at 0:00 CET and ensure it doesn’t drop by more than 5% of your initial deposit within that day.

For instance, let’s say you have a $100,000 account and generate profits of $3,000 (closed or floating) in one day. These profits are added to your Max Daily Loss limit, increasing your daily allowable drawdown to $8,000 in total (i.e., $5,000 base limit + $3,000 profit) until 0:00 CET. At midnight, your Max Daily Loss will reset back to the base $5,000.

If, on the other hand, you incur losses of $3,000 (closed or floating) in a day, this amount is subtracted from your Max Daily Loss. This means your total allowable drawdown for the day becomes $2,000 (i.e., the original $5,000 base limit – $3,000 loss) until 0:00 CET. Again, the Max Daily Loss resets back to $5,000 at midnight.

You can view and examine your permitted Loss Limits at any time in the Client area of your dashboard.

FAQs About True Forex Funds Loss Limits