Maximum loss
This rule can also be called “account stop-loss”. Maximum Loss is the difference between your highest recorded balance and your current equity.
Depending on your trading program, phase and chosen trading strategy the difference between highest recorded balance and subsequent lowest equity cannot reach below 5% – 20%.
For example if the maximum loss is 5%, here is the formula for Maximum Loss calculation:
Current Equity / Highest Recorded Balance x 100% = must be over 95% at all times.