Real-Time Drawdown

Real-time drawdown calculation includes unrealized profit and loss from currently open positions. The moment account equity — closed PnL plus the marked-to-market value of open trades — crosses the threshold, the rule triggers and the account is paused or terminated.

This contrasts with end-of-day (EOD) calculation, which evaluates the limit only against closed equity at session close. Under EOD calculation, a trade that runs 6% underwater intraday but closes the day at -2% does not breach a 5% daily limit. Under real-time calculation, the same trade triggers termination the instant the 5% threshold is crossed, regardless of whether the position later recovers.

Real-time enforcement materially changes the trading style a firm can support. Strategies that involve riding through normal volatility — wider stops, options selling, mean-reversion entries — become much harder to execute. Firms using real-time enforcement push traders toward tighter stops and faster reactions. Before signing up, confirm whether daily loss, max drawdown, and trailing drawdown are each evaluated in real time or only at EOD; the answer is sometimes different for each.