Blow Up
Risk
Blow up means hitting the maximum drawdown or daily loss limit on a funded account, resulting in account termination.
Blow up means hitting the maximum drawdown or daily loss limit on a funded account, resulting in termination. The term comes from the trading-floor lineage of "blowing up" an account through a single oversized loss or a series of losses.
Blow-up causes typically cluster around: oversizing after losses (revenge trading), holding through news events without protection, ignoring the daily-loss limit as a hard stop, and trading instruments outside normal expertise.
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