> ## Knowledge Base Index
> Fetch the complete knowledge base index at: https://maventrading.crisp.help/sitemap.xml
> Use this file to discover available pages before exploring further.
> Pure-Markdown content can be obtained by appending a '.md' suffix to the content URLs listed in the sitemap (without the trailing slash).

# What are the drawdown types?

**What are the drawdown types?**

**Static**
The drawdown doesn't change.

**Equity Based**
The drawdown resets based on equity or balance (whichever is highest) at 00:00 UTC. A trading day runs from 00:00 UTC to 23:59 UTC.

\*\*Example: \*\*You have a $1000 account, you open a trade and leave it running overnight. Your equity at 00:00 UTC is $1100, but your balance is $1000. Your max daily drawdown will be 4% of $1100 ($44), your account will breach the daily drawdown if you go beneath $1,056 on that day.

**Balance Based**
The drawdown resets based on the Balance at the daily rollover.

\*\*Example: \*\*You have a $1000 account, you open a trade and leave it running overnight. Your equity is $1,100, but your balance is $1,000. Your max daily drawdown will be 4% of $1,000 ($40).

**Trailing**
The drawdown moves automatically with the highest equity point in your account. Importantly, the highest equity is based on your **live equity** (including any open floating positions), not your closed balance.

If you start with $1,000 in equity and your trailing max drawdown is 3%, your starting trailing max drawdown is $30. If you gain $100 in equity your new highest equity point is $1,100 and your new trailing max drawdown is 3% of $1,100 which is $33. So if your account goes below $1,067 that would be a breach.

**Example (One-Step $5,000 account, 5% trailing drawdown):**
You have a running trade and your equity reaches $5,250. Even if you then close that trade at $5,200, your highest equity remains $5,250 — because it was the peak of your live equity, not the closed trade value.

5% of $5,250 = $262.50 trailing drawdown

This means your account equity cannot drop below:
$5,250 − $262.50 = **$4,987.50**

If your equity falls below $4,987.50 at any point, your account will be breached. As your equity rises further, the trailing drawdown floor follows upward accordingly.

**Important Note on Daily Drawdown Calculations**
Daily drawdown is calculated based on the **higher value of equity OR balance at 00:00 UTC**, whichever is greater. This means:
* If you hold an open profitable trade overnight, your equity may be higher than your balance at reset
* The daily drawdown limit is calculated from this higher equity value
* Your account will breach if your equity falls below the limit (higher balance/equity at 00:00 UTC minus the drawdown percentage)
* A breach can occur even if closed trades haven't reached the loss threshold, because the calculation includes floating PnL from open positions at the reset time

**Important notes for Instant Funding accounts:**
* The trailing drawdown is calculated on your **highest equity** reached at any point, not on your closed balance or closed trades.
* The trailing drawdown **resets after a withdrawal/payout**. Once a payout is processed, the drawdown limit is recalculated based on your new account balance.

**Important notes for Buy Now Pay Later (BNPL) funded accounts:**
* The trailing drawdown **does not reset** after a payout.
* During the funded stage, a **4% equity-based daily drawdown** and an **8% trailing max drawdown** apply.
* The 8% trailing drawdown is calculated from the **highest equity ever reached** — not the starting balance.
* The trailing DD only begins moving once your equity reaches 8% above the starting funded balance. Until then, the drawdown floor stays at the original funded balance.
* **After your first payout**, you must leave a buffer in the account. This remaining balance becomes your effective drawdown floor. There is **no more daily or max drawdown** rule after the first payout — only the buffer you leave behind protects the account.
* **Withdrawing all profits** is possible, but doing so will close the account since no drawdown buffer would remain. To keep trading, leave a portion of profits as a safety buffer.

**Example ($10,000 BNPL funded account):**
* You reach $10,500 equity and withdraw $500 → balance is $10,000. The drawdown floor is locked at $10,000, so any further loss would immediately breach the account.
* You reach $10,500 equity and withdraw $400 → balance is $10,100. The 8% trailing drawdown won't activate again until equity reaches $10,800 (8% above $10,000).