Understanding the 3% Loss Limit per Trade Rule
The 3% Loss Limit per Trade Rule is designed to promote responsible risk management and ensure account longevity. Under this rule, no individual trade or group of overlapping trades on the same symbol should incur a loss exceeding 3% of the initial account balance.
This rule strictly applies to the Pro challenge model in the funded stage. Exceeding this limit will result in an account breach and forfeiture of applicable payouts.
How It Works
If a trade on the same symbol is split into multiple positions, these will be combined into a single trade for loss calculation if they overlap in time.
If any trade overlaps with another trade that itself overlaps with a third trade or more, all linked trades must be grouped together for loss calculation. This applies even if the first and third trades do not directly overlap—as long as there is a continuous chain of overlapping trades, they must all be considered as one.
The total loss from these combined positions must not exceed 3% of the initial account balance.
Exceeding the limit will result in an account breach and forfeiture of payouts.
Example Calculations
Example 1: Single Trade Scenario
✅ Non-Violation
Account Balance: $100,000
Maximum Allowable Loss (3%): $3,000
Trade Details: Trader enters a single EUR/USD trade and closes it at a $2,800 loss.
Outcome: No violation, as the loss remains within the 3% limit.
❌ Violation
Account Balance: $100,000
Maximum Allowable Loss (3%): $3,000
Trade Details: Trader enters a single EUR/USD trade and closes it at a $3,500 loss.
Outcome: Violation occurs, account is breached, and trader is ineligible for payouts.
Example 2: Multiple Trades on the Same Symbol (Overlapping Trades)
❌ Violation (Overlapping trades)
Account Balance: $100,000
Maximum Allowable Loss (3%): $3,000
Trade Details:
3:00 PM: Trader opens a Gold trade.
4:00 PM: Trader opens another Gold trade before the first one is closed.
4:30 PM: The second trade is closed with a $1,500 loss.
5:00 PM: The first trade is closed with a $2,000 loss.
Total Loss from Overlapping Trades: $3,500
Outcome: Violation occurs because both trades were active at the same time and exceeded the 3% limit when combined.
✅ Non-Violation (Non-Overlapping Trades)
Account Balance: $100,000
Maximum Allowable Loss (3%): $3,000 per trade
Trade Details:
3:00 PM: Trader opens a Gold trade and closes it at 5:00 PM with a $2,000 loss.
6:00 PM: Trader opens another Gold trade and closes it at 7:00 PM with a $2,000 loss.
Outcome: No violation, since the trades did not overlap in open and close time, allowing each trade to be considered separately.
❌ Violation (Overlapping trades)
Account Balance: $100,000
Maximum Allowable Loss (3%): $3,000
Trade Details:
3:00 PM: Trader opens a Gold trade (Trade 1).
4:00 PM: Trader opens another Gold trade (Trade 2) before the first one is closed.
4:30 PM: Trade 2 is closed with a $1,500 loss (Trade 1 is still open).
4:45 PM: Trader opens a third Gold trade (Trade 3) before Trade 1 is closed.
5:00 PM: Trade 1 is closed with a $2,000 loss.
6:00 PM: Trade 3 is closed with a $2,500 loss.
Key Overlap Chain Analysis:
Trade 1 and Trade 2 overlapped (3:00 PM - 4:30 PM).
Trade 3 overlapped with Trade 1 (4:45 PM - 5:00 PM).
Since Trade 3 was active before Trade 1 was closed, all three trades must be grouped together.
Total Loss from Overlapping Trades:
Trade 1 Loss: $2,000
Trade 2 Loss: $1,500
Trade 3 Loss: $2,500
Total Combined Loss: $6,000
Outcome: ❌ Violation occurs because Trades 1, 2, and 3 overlapped in a chain, leading to a combined loss exceeding the 3% limit.
Important Notes
This rule is effective from February 17, 2025. Trades executed before this date do not fall under this rule.
Overlapping trades on the same symbol are combined into one trade for loss calculation.
Non-overlapping trades on the same symbol are treated separately, each with its own 3% limit.