Example 1: Partial Withdrawal After Hitting Max Trailing Drawdown
You start with a $100,000 account.
Daily Drawdown: 4% → $96,000
Max Trailing Drawdown: 6% → $94,000
You generate $8,000 in profit, bringing the account to $108,000, and request a $6,000 withdrawal.
Because the account reached a 6% gain, the maximum drawdown becomes fixed at $100,000. After the withdrawal, the account balance is $102,000, leaving a 2% ($2,000) buffer before reaching the max drawdown level.
Example 2: Larger Profit, Larger Drawdown Buffer
You start with a $100,000 account.
Daily Drawdown: 4% → $96,000
Max Trailing Drawdown: 6% → $94,000
You generate $15,000 in profit, increasing the balance to $115,000, and request an $8,000 withdrawal.
Since the account exceeded the 6% profit threshold, the max drawdown is locked at $100,000. After the withdrawal, the account balance is $107,000, giving you a $7,000 buffer before hitting the max drawdown limit.
Example 3: Withdrawal Limited by Fixed Buffer
You start with a $100,000 account.
Daily Drawdown: 4% → $96,000
Max Trailing Drawdown: 6% → $94,000
You generate $6,000 in profit, bringing the balance to $106,000. Due to the 1% fixed buffer requirement, the maximum withdrawable amount is $5,000.
After the withdrawal, the account balance becomes $101,000, and the max drawdown is locked at $100,000, leaving a $1,000 buffer.