At Financia Futures, we implement specific risk management strategies to ensure a fair and secure trading environment for both our traders and the firm. One of these strategies is drawdown. It's crucial for every trader to understand how drawdown works on our platform to ensure they are trading responsibly within their account’s limits.

What is Drawdown?

Drawdown refers to the reduction in the value of a trader’s account from its highest point to its lowest point, typically measured as a percentage. It indicates the level of loss from the peak to the trough in an account balance during a specific period of trading.

For instance, if you start with a $10,000 account and your account balance drops to $8,000, you have experienced a 20% drawdown.

Static vs. Trailing Drawdown

At Financia Futures, we utilize a static drawdown model, which is different from the trailing drawdown model used by other platforms.

• Static Drawdown:
  With static drawdown, the drawdown is fixed at a certain value based on your initial account balance. For example, if your drawdown is set at $47,500, it remains fixed at that level even if your account balance increases. So, if you make $1,000 in profit, your drawdown limit will still be $47,500.

  Example: If you start with an account balance of $50,000 and your drawdown is set to $47,500, the maximum loss allowed is $2,500. If you earn $1,000, your drawdown limit will still be $47,500, and the loss threshold remains $2,500, even after the profit.

• Trailing Drawdown:
  In contrast, trailing drawdown follows your profits. If your account balance increases, your drawdown limit increases accordingly. For example, if your drawdown is set at $47,500 and you make $1,000 in profit, your drawdown limit would increase to $48,500.

  Example: If you start with a $50,000 balance and your trailing drawdown is set at $47,500, after making $1,000 in profit, your drawdown limit would adjust to $48,500, allowing for a larger loss before being stopped out.

Why is Static Drawdown Important?

With a static drawdown model, traders have clear, predetermined limits on their losses. This model provides a fixed safety net that doesn’t fluctuate with your profits. It allows you to focus on trading without worrying that your risk tolerance will change as your account balance increases.

How We Help You Manage Drawdown

At Financia Futures, we provide a static drawdown model to help traders maintain consistent risk management. With this model, once your drawdown limit is reached, you will be stopped out to prevent further losses. This ensures that both the trader and the firm remain protected from significant financial exposure.

Managing Your Drawdown

To successfully manage drawdown, here are some best practices:

1. Follow Your Trading Plan:
   Stick to your trading strategy and risk management rules. Always use stop-losses to protect your account from large drawdowns.

2. Avoid Overleveraging:
   Excessive leverage can amplify losses. Ensure you are using appropriate leverage to manage drawdown risk effectively.

3. Monitor Your Risk:
   Keep an eye on your account balance and be aware of how close you are to your drawdown limit. Adjust your positions if necessary.

4. Use Smaller Position Sizes:
   If you are close to your drawdown limit, consider reducing your position sizes to avoid triggering the limit.

Example of Static Drawdown at Financia Futures

• Starting Balance: $50,000

• Drawdown Limit: $47,500 (static drawdown)

• Current Balance: $51,000 (after earning $1,000)

• Drawdown Limit Remains: $47,500

Even though your account has increased by $1,000, the drawdown remains fixed at $47,500. This means you can still lose up to $2,500 before you reach the drawdown limit.

Need More Help?

If you have any questions about our static drawdown model or how it works, feel free to contact our support team at help@financiafutures.com.