Understanding Earn2Trade’s Drawdown and Trailing Rules

Understanding Earn2Trade’s Drawdown and Trailing Rules

Drawdown rules are the #1 reason traders lose prop firm challenges. Earn2Trade uses a trailing drawdown system, which can be confusing but is designed to protect both trader and firm capital. This article explains the rule in plain English, provides examples, and shares pro tips for staying compliant throughout your evaluation and after funding.

What is Trailing Drawdown?

• Starts at your account’s initial balance (e.g., $25,000).
• Moves up as your equity hits new highs, but never goes back down.
• If your balance falls below the “stop out” (initial balance minus trailing DD), your account fails.

How it Works in Practice

• If you start at $25,000 and your max drawdown is $1,500, your stop out is $23,500.
• If you grow your account to $27,000, the stop out becomes $25,500.
• After the trailing drawdown “locks” (usually after hitting a profit target), the stop out level no longer moves.

Tips for Managing Drawdown

• Risk small (0.5–1% per trade).
• Monitor your dashboard for real-time stop out updates.
• Never trade emotionally or try to “make back” losses in one trade.

Common Mistakes

• Holding trades through big news or overnight swings can instantly violate drawdown.
• Misunderstanding “realized” vs. “open” profit/loss—always check the FAQ for how your drawdown is measured.

Final Word

Mastering Earn2Trade’s drawdown rules is the secret to passing the challenge and staying funded. For full details, visit Earn2Trade’s official FAQ or ask support for clarification before trading live.