What are the Drawdown Rules at Pivex Funded?

Managing drawdowns is a key aspect of successful trading at Pivex Funded. To pass the Trading Challenge and maintain your account, it’s essential to understand and respect the two main drawdown limits: the Daily Drawdown and the Overall Static Drawdown.

The Two Types of Drawdown

1. Daily Drawdown (4%)

The Daily Drawdown is the maximum amount your account equity can decrease in a single day.

• How it's calculated: The limit is 4% of your equity at the start of the trading day (00:00 UTC). This limit adjusts daily based on your equity.

• Purpose: This rule limits the impact of a single day's volatility and encourages consistent, controlled trading rather than risking too much in one session.

Example:

If your equity at the start of the day is $100,000, your daily drawdown limit is $4,000. Your equity cannot drop below $96,000 on that day. If your equity grows to $110,000 by the start of the next day, the new daily drawdown limit becomes $4,400 for that day.

2. Overall Static Drawdown (6%)

The Overall Static Drawdown is the absolute maximum loss your account can incur, and it is fixed based on your initial balance.

• How it's calculated: The limit is 6% of your starting balance and it does not change, even if your account equity grows. This is why it's called "static."

• Purpose: The static drawdown ensures that traders maintain consistent risk management over the long term without being influenced by short-term gains.

Example:

If you start with a $100,000 account, your maximum overall loss is $6,000. Your equity must not fall below $94,000 at any point during the challenge.

Practical Example of a Drawdown Breach

Here’s how quickly drawdowns can be breached without proper risk management:

• Account Balance: $5,000

• Max Daily Loss (4%): $200

• Max Overall Loss (6%): $300

A trader opens a large position of 10 lots on BTC/USD, where each pip movement is worth $15. If the trade moves against them by just 20 pips, the loss is 20 x $15 = $300.

• Outcome: The trader has instantly breached both the daily ($200) and overall ($300) drawdown limits. The account is closed, and the Challenge is marked as unsuccessful. This highlights the critical need for proper position sizing.

How to Avoid Exceeding Drawdown Limits

• Use Proper Position Sizing: Risk a small percentage (e.g., 1-2%) of your balance on any single trade. For a $5,000 account, avoid excessively large positions like 10 lots; consider using 0.5 or 1 lot instead to minimize risk.

• Set Stop-Loss Orders: Always use stop-loss orders to automatically close trades at a predetermined loss level, protecting you from significant market moves.

• Avoid Overleveraging: Use leverage responsibly. High leverage magnifies both profits and losses, dramatically increasing your risk.

• Track Market Conditions: Be aware of market trends and avoid trading during periods of extreme volatility, such as major news releases.

• Maintain Discipline: Stick to your trading strategy and avoid emotional decisions.

Consequences of Exceeding Drawdown Limits:

If you breach either the daily drawdown or overall drawdown limits, your Challenge will be considered unsuccessful, and you will not be able to proceed to the Pivex Funded Stage (Funded Trader Stage).

• To continue, you would need to purchase a New Challenge.
• The system will notify you immediately if a drawdown limit is violated, and your account will be closed.

Maintaining discipline and understanding how drawdowns are calculated will help you stay on track during your Trading Challenge. By keeping your losses under control, you increase your chances of progressing to the Funded Trader Stage and earning real payouts.

If you need further guidance on drawdown management or risk strategies, our support team is always here to assist you!