How drawdown & failure work

The one rule behind every drawdown type - equity vs. the failure threshold - and which phase settings produce each behavior.

Every drawdown type is the same rule. What differs is the value each one measures down from - its anchor. Get this page, and every account’s failure behavior follows.

At a glance: an account fails the instant its equity touches its failure threshold. The phase settings decide where that threshold sits and when it moves. For step-by-step examples with the numbers filled in, see Drawdown scenarios.

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The one rule

equity            = balance + unrealized P&L
failure threshold = anchor - max drawdown

The account FAILS the instant equity <= failure threshold

Three facts, true of every type without exception:

1. Equity includes unrealized P&L - in both directions. Whenever a position is open, equity and balance are different numbers. An open losing position breaches an account exactly like a closed one, so holding a loser open never protects you. An open winning position pushes equity above balance - and on a trailing account that raises the peak, and with it the floor.
2. The check is live, on every tick - not at the close, not on realized P&L only.
3. The failure threshold never moves down. A losing day never lowers it.

Every type measures its floor down from an anchor - a reference value such as the starting balance, or the highest point the account has reached. The drawdown type decides only where that anchor sits and when it moves. Nothing else.

Balance and equity are not the same number. Current balance is realized only; Current equity adds the unrealized P&L of whatever is still open. Starting from a $50,000 balance:

Open position	Current balance	Current equity
None (flat)	$50,000	$50,000
$3,000 in profit	$50,000	$53,000
$2,000 down	$50,000	$48,000

Every drawdown check reads equity, never balance - which is why the charts on this page plot both lines. Scenario S2 is the case where that distinction decides the outcome.

The failure threshold is derived, never stored. With Lock trailing drawdown off it is anchor - max drawdown. With it on it is min(anchor - max drawdown, initial balance + Max trailing DD limit) - the lock ceiling caps it. Any value that cannot be reproduced from the anchor, the max drawdown and the lock ceiling is wrong. The CRM displays it as Failure threshold.

All amounts on this page are illustrative. They show how the rules behave - they are not live product settings. For any real account, read the values from its phase configuration.

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Which fields control it

Everything on this page traces back to fields on the phase, set on Challenge phases. This is the map:

Phase setting	What it controls
Global drawdown type	Where the anchor sits and when it moves - Static, Trailing (intraday), or End of day.
Global DD threshold	The max drawdown: how far below the anchor the floor sits. Always a hard breach.
Max trailing DD limit	The ceiling a trailing floor stops climbing at - initial balance plus this offset.
Lock trailing drawdown	Whether that ceiling is applied at all.
Daily drawdown	A second floor, reset every session.
Check daily drawdown	Master switch for the daily floor. Off = the amount is ignored entirely.
Soft breach	Whether a daily breach pauses the account or fails it. Daily only - it never affects max drawdown.
Auto-flatten before market close	Off = swing - the account may hold overnight, and the floor is checked around the clock.
Initial balance	The static anchor, and the reference point for the lock ceiling.

The phase is the source of truth. An account is bound to a phase, and that phase’s values are what get enforced - a phase may carry a different initial balance from its parent challenge.

A valid configuration satisfies all of these:

• Global DD threshold is greater than zero and strictly under Initial balance
• The account’s starting balance equals the phase’s Initial balance
• Daily drawdown is strictly under the Global DD threshold, or Check daily drawdown is off
• Every active account has a max-drawdown rule bound to it
• Day N’s closing balance equals day N+1’s starting balance, net of commissions

A valid Failure threshold satisfies all of these: it reproduces exactly from the anchor, the Global DD threshold and the lock ceiling; it never decreases over the life of the account; and with Lock trailing drawdown on it never exceeds Initial balance + Max trailing DD limit.

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The breach is the touch

The account fails at the intraday touch, even if it closes green.

The instant equity reaches or falls below the failure threshold, the account has failed - and it is immediately flattened (every position closed, every order cancelled). A later recovery does not un-fail it. Failure is decided by the lowest point equity reached, never by where the day ended.

A $50,000 account with the floor at $49,000 touches $48,900 at 11:00, then rallies to close at $51,300. It failed at 11:00. After 11:00 it held no position, so that $51,300 close is a number it could never actually reach.

Never evaluate an account on its closing balance. A closing-balance check passes an account that already failed intraday - the most expensive mistake available in these rules. Evaluate against the intraday low, on equity.

What happens during the flatten

The flatten is not instantaneous. It holds for about 6 seconds, or until every position is confirmed closed - whichever is longer - and no new orders can be submitted during that window.

On a fast move the liquidation can fill at a worse price than the floor, so the final balance can end up below the level that triggered the breach. That is expected and does not change the verdict: the breach is the touch that started the flatten, not the price the flatten happened to fill at.

Step-by-step examples: Breach mechanics B1–B3.

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The three types

Global drawdown type selects the anchor - that is the only thing that differs between them.

Type	Anchor	When the anchor moves
Static	Initial balance	Never
Trailing (intraday)	Highest equity ever reached, including unrealized	Continuously, on every new equity high
End of day	Highest closing balance ever reached	Once per day at the close, and only on a new high

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Static

Set Global drawdown type to Static. The floor is initial balance - Global DD threshold, fixed for the life of the account.

Static - a fixed floor, so every dollar of profit widens the gap to it.

A line in the sand set on day one. The more the account banks, the more it can lose in a single day without failing.

$50,000 account, $2,000 Global DD threshold. Floor = $48,000, forever.

Day	Balance at open	Can lose before failing
1	$50,000	$2,000
30	$60,000	$12,000

The single-day allowance grows without bound. A profitable static account with no daily limit really can lose a very large amount in one session and survive, because the only floor is that fixed line. Add a Daily drawdown if you want to cap each session.

Step-by-step examples: Static scenarios S1–S4.

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Trailing (intraday)

Set Global drawdown type to Trailing. The peak equity updates on every tick - including unrealized - and the floor is peak equity - Global DD threshold.

Intraday trailing - the floor follows the peak up; unrealized counts.

The floor follows the account up in real time, and unrealized profit counts. This is the tightest of the three, and the one traders dispute - a trade that goes green and round-trips costs drawdown room while making no money.

$50,000 account, $2,500 Global DD threshold.

Moment	Equity	Peak	Floor
Open	$50,000	$50,000	$47,500
Position runs 1,000 in profit (unrealized)	$51,000	$51,000	$48,500
Position round-trips back to flat	$50,000	$51,000	$48,500 - does not move back down
Trader then loses 1,600	$48,400	$51,000	FAILED

Down only $1,600 on the day, failed on a $2,500 drawdown account. The unrealized high did that.

Step-by-step examples: Trailing scenarios I1–I3.

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End of day

Set Global drawdown type to End of day. During the session the floor is highest closing balance - Global DD threshold and is frozen. At the close, once, the anchor moves up - but only if that close is a new high.

More forgiving intraday: the account can run a position deep into profit and give it all back without moving the floor. The floor only advances if the gain is banked and the day closes at a new high.

“End of day” describes when the anchor moves, not when the breach is checked. An End-of-day account is checked live, on equity, every second of the session - against a floor that is frozen for that session. Frozen, not suspended. That is exactly the case in the chart at the top of this page.

$50,000 account, $2,000 Global DD threshold.

Day	Intraday high	Closing balance	Floor after the close
1	$50,750 (unrealized)	$50,000	$48,000 - the close was not a new high
2	$51,300	$51,000	$49,000 - new high, so the floor moves up
3	$51,200	$49,500	$49,000 - a losing day never lowers it

Two properties of that closing balance this depends on:

• It is net of commissions. A gross figure drifts from the true balance and misplaces the floor.
• Day N’s closing balance is day N+1’s starting balance. Always the same number. If the two ever disagree, that is a commission or carry issue, not a rule difference.

Step-by-step examples: End-of-day examples E1–E5.

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Three values that sound alike

Account details shows three different “peak” figures, and picking the wrong one is the most common mistake in this whole rule set. They are not interchangeable:

Field	What it records	Anchors which drawdown type
Peak equity	The highest equity the account ever reached - so it includes unrealized profit from open positions.	Trailing (intraday)
Peak realized balance	The highest realized balance the account reached at any moment, including mid-session.	None. It anchors nothing - this is the trap.
EOD peak balance	The highest closing balance - the value is sampled only at the session close.	End of day

Peak realized balance is not the end-of-day peak balance. A balance high reached at 13:00 and given back before the close raises Peak realized balance but leaves EOD peak balance untouched. Anchoring an End-of-day account to the wrong one puts the floor too high and fails accounts that should have survived.

The balance peaks intraday at $51,500, but only the $50,800 close moves the end-of-day anchor.

Here it is in numbers: the account opens at $50,000 and the trader banks winners through the morning, so the realized balance climbs to $51,500 by 13:00. Afternoon losses give some back and the day closes at $50,800.

• Peak realized balance = $51,500 - a real high, but it is not what the end-of-day rule reads.
• EOD peak balance = $50,800 - the close, and the only value that moves the anchor up.
• Tomorrow’s floor is therefore 50,800 - 2,000 = $48,800, not 51,500 - 2,000 = $49,500.

The same principle explains E2: an unrealized intraday high does not move the anchor either. Only the closing balance does - realized or not, mid-session highs are ignored by the end-of-day rule.

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Locking a trailing floor

Two fields work together: Lock trailing drawdown turns locking on, and Max trailing DD limit sets the offset. The ceiling is initial balance + Max trailing DD limit.

Once the trailing floor reaches that ceiling it locks and never moves again. From that point the account behaves exactly like a Static account, including the growing single-day allowance.

The trailing floor climbs, then locks at the ceiling and stops.

Offset	Ceiling on a $50,000 account	Effect
$100	$50,100	The floor locks just above break-even.
$0	$50,000	The floor locks at the initial balance - any loss below the starting balance then fails the account.

There is no universal offset. It is set per firm, and sometimes per challenge - anywhere from $0 upward. Always read Max trailing DD limit from the phase configuration; never assume a value.

The ceiling applies whatever the Global drawdown type. Whenever Lock trailing drawdown is on, the failure threshold is min(anchor - Global DD threshold, initial balance + Max trailing DD limit) - for Static, Trailing and End of day alike. On Static the cap can never take effect, because the anchor is the initial balance itself. On End of day it takes effect once the EOD peak balance has climbed more than Global DD threshold + Max trailing DD limit above the initial balance.

Before the floor reaches the ceiling it is still trailing. It becomes static only after it locks.

Step-by-step examples: Locking scenarios L1–L4.

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Daily loss limit

A second, independent floor that resets every session: daily floor = start-of-day balance - Daily drawdown.

The daily total includes unrealized P&L, exactly like the max drawdown - it is realized today + unrealized - commissions today.

Two toggles govern it:

• Check daily drawdown - the master switch. Off, and the Daily drawdown amount is ignored entirely, whatever value is stored.

Do not leave Daily drawdown at 0 or blank while Check daily drawdown is on. The test is equity <= daily floor, and a 0 amount puts the daily floor exactly at the start-of-day balance - so the account breaches on its first tick into loss and never gets a chance to trade. If you do not want a daily limit, turn Check daily drawdown off instead.

• Soft breach - whether a daily breach pauses the account for the session or fails it permanently.

Breach	What happens	Afterwards
Soft breach	Flatten, cancel, and no trading for the rest of the session.	Trades again next session
Hard breach	Flatten, cancel, fail.	Never trades again

Max drawdown is always a hard breach. Soft breach applies only to the daily drawdown - it has nothing to do with the Global DD threshold.

A soft breach flattens exactly like a hard one. The instant it triggers, every position is closed and every order cancelled, and the trader can take no action for the rest of the session. The only difference is what happens next.

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What happens on each kind of breach

Once an account has breached, every order it submits is rejected, and the reason given states which floor was crossed. The outcome and the stated reason must agree - and both are decided by which floor was breached, nothing else.

Breach	Account outcome	Status	Stated reason
Max drawdown (any type)	Terminal - the account has failed	FAILED	The account’s equity has reached or fallen below the failure threshold, so trading is no longer allowed on this account. Never “suspended,” never a resume time.
Daily, soft	Flattened and closed out for the session; reactivates next open	DONE_FOR_DAY	The account hit its daily drawdown limit, so no further trading is allowed for the remainder of this session. It resumes at the next session open.
Daily, hard	Terminal	FAILED	The daily drawdown reached the allowed daily drawdown, so trading is no longer allowed on this account.
Daily, with Check daily drawdown off	Nothing happens	unchanged	Nothing is stated and no order is rejected - the rule is not enforced.

The max-drawdown reason names two live values: the account’s current equity at the moment it breached, and the Failure threshold computed for it. Neither is a fixed drawdown amount, and neither may be hardcoded - both are derived from the account’s own phase configuration.

DONE_FOR_DAY is an engine state, not a status you can look up. It does not appear in the Accounts grid’s Account status column, and you cannot filter on it. A soft-breached account still reads as Active there, because it has not failed and it trades again next session. To see that an account stopped for the session, check its Account events rather than its status.

A max-drawdown breach must never produce a “suspended until…” message - there is no time at which that account returns. And where there is a resume time, it is the next session open (futures 6:00 PM EST), never the session close.

Do not express “this product has no daily limit” by setting Daily drawdown equal to the Global DD threshold. Turn Check daily drawdown off instead. Equal amounts happen to behave correctly on a trailing account, but silently impose a real daily cap on a profitable static one.

Step-by-step examples: Static with a daily limit, Trailing and End of day with a daily limit, plus the hard and disabled variants.

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Evaluation order

Max drawdown is always checked first. If it breaches, the account fails and the daily branch never runs.

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Two floors: which one stops the trader first

An account with both rules has two thresholds, and on the way down the higher one is reached first. The the floor reached first is the higher of the failure threshold and the daily floor.

With both floors, the higher one is hit first.

The Failure threshold shown in the CRM is the max-drawdown floor only - it does not account for the daily loss limit. On any day where the daily floor sits higher, the trader is stopped above the displayed number, and the CRM gives no indication of it. The number on screen is correct; it is just not the whole picture.

$50,000 End-of-day account. Global DD threshold $2,000 (Failure threshold $48,000). Daily drawdown $1,100.

Day	Start balance	Daily floor	Failure threshold	Reached first
1	$50,000	$48,900	$48,000	Daily floor
2	$49,000	$47,900	$48,000	Failure threshold

Day 1. Equity touches $48,900 and the daily floor stops the trader, because it is the higher of the two. With Soft breach on, that is a pause for the session - the account survives and reactivates next session. The Failure threshold at $48,000 was never approached.

Day 2. The trader loses another $1,000 and touches $48,000. This time the Failure threshold is the higher of the two, so it is reached first and the account fails permanently. The daily floor at $47,900 was never reached.

On day 2 the trader lost $1,000 against an $1,100 daily limit. They never hit their daily limit, and the account fails anyway.

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When both break at once

A gap or a fast market can carry equity through both floors on a single tick.

Max drawdown wins - a hard breach beats a soft breach. A soft breach only pauses the account for the session; a hard breach fails it permanently. A pause can never override a failure, so when both floors are crossed on the same tick the account is failed, not suspended. The daily loss limit is a monitoring threshold that triggers a flatten - it is not a stop loss, and it cannot rescue an account that has already breached its Failure threshold.

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When the daily limit stops being the first floor reached

Profit lifts the Failure threshold above the daily floor, so the daily limit is no longer the first one reached.

A quick way to answer “which floor am I on today?” - compare two numbers:

H = Global DD threshold - Daily drawdown
G = anchor - start-of-day balance

The daily limit protects the trader only while G < H

Type	What G is	What that means
Static	Negative while the account is in profit	While the account is in profit, the daily floor is the one reached first and is doing real work. Once the account falls back within one daily limit of its Failure threshold, that stops being true - see SD3.
End of day	The drawdown already carried from the EOD peak	The daily limit stops protecting once that exceeds H.
Trailing	The gain above the session open	Making money can lift the Failure threshold above the daily floor. Once the trader is up more than H intraday, the Failure threshold is reached first and the next breach is terminal.

Step-by-step examples: Trailing with a daily limit ID1–ID3 and End of day with a daily limit ED1–ED3.

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Swing accounts

Auto-flatten before market close = off makes a challenge swing: positions may be held across the session boundary and held overnight.

Swing is not a fourth drawdown type. It sits on top of Static, Trailing, or End of day and changes only how the floor is evaluated and carried across the overnight boundary.

A swing account is checked on equity around the clock, including through the overnight session.

• Evaluated on equity, around the clock. The unrealized P&L of the overnight position counts exactly as it does intraday, so an overnight loser can breach the account before the next session even opens. There is no realized-only fallback.
• The anchor carries on the closing value at the boundary. For a flat-at-close account the End-of-day carry uses the realized closing balance. For a swing account holding a position at the boundary it uses closing equity by default, which includes that open position. Some firms carry the anchor on the higher of the closing balance and the closing equity instead, so an overnight loser holds the anchor at the realized balance; the two differ only when the boundary position is at a loss, so read it from the configuration rather than assuming. The failure check reads equity either way, so an overnight loser can still breach while the anchor is held at the realized balance.

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Swing accounts and the daily limit

No swing product runs a daily limit today. Every swing account carries a max drawdown only, so the two-floor machinery on this page does not apply to any swing account that currently exists. If you are checking a swing account, there is one floor to check.

If you ever configure a daily limit on a swing account, the daily floor cannot come from the balance. Everywhere else the daily floor is start-of-day balance - Daily drawdown. On a swing account carrying a losing position across the boundary, the balance does not include that loss but the equity does - so a floor derived from balance would show the account breaching its daily limit at the open, before the trader has placed a single order that day.

Both floors on a swing account are measured from the carried value at the boundary - the higher of the closing balance and closing equity - not from the realized balance.

Step by step. A $50,000 account ends the session holding a winner: balance $50,000, equity $53,000. At the next open, both floors come off that $53,000:

Limit	Floor at the next open
Daily drawdown $2,000	53,000 - 2,000 = $51,000
Global DD threshold $3,000	53,000 - 3,000 = $50,000

Derive either floor from the $50,000 balance instead and you place it $3,000 too low. Talk to the Tickblaze team before configuring a daily limit on a swing account; none runs one today.

Static swing

The floor is fixed at initial balance - Global DD threshold and never moves, so there is nothing to carry across the boundary. The only swing effect is that the fixed floor is live overnight - an overnight loser can breach it, and a recovery by morning does not un-fail the account.

Trailing (intraday) swing

The equity peak keeps trailing through the overnight session, including on the unrealized highs of the open position. This is the tightest possible configuration: an overnight winner that spikes and retraces moves the floor up on the spike, and can fail the account on the retrace while the market is otherwise closed.

Step-by-step examples: Swing scenarios W1–W4.

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Operational edge cases

These are the cases where the account’s state does not match what the rules would produce. Each one is rare, and each has a defined recovery.

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When auto-flatten does not run

Auto-flatten before market close = on means the account should be flat at the session close. If it does not run - for any reason - the position is still open afterwards, and an intraday account ends up holding into a window it was never meant to be in.

The rule does not change. Futures keep trading after the 5:00 PM close, so equity keeps moving on that position, and the floor is still checked against it on every tick. If equity reaches the failure threshold in that window, the account fails there, exactly as it would have intraday.

The failure stands regardless of why the position was still open. The breach is decided by equity reaching the failure threshold, not by whether the position should have been closed an hour earlier. An account that should have been flattened at 5:00 PM and instead breached at 5:40 PM has failed at 5:40 PM.

An intraday account holding past its session close is not expected behaviour. Tell the Tickblaze team - the failure itself is correct and stands, but the position surviving the auto-flatten is not.

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A position that outlives the flatten

Normally the flatten leaves nothing behind. But a position can still be open after a breach - during those first few seconds, on a swing account that breaches overnight, or where something goes wrong and one position stays open to the close.

None of that re-opens the question. The rules do not run again:

• The account failed the instant equity reached the failure threshold. That recorded failure is the authoritative one, and nothing after it is evaluated. A surviving position cannot un-fail the account, and it cannot fail it a second time.
• The surviving position’s profit and loss still moves the account balance. So the closing balance can end up above or below the failure threshold, and neither tells you anything about whether the account failed.

This is exactly why the failure is recorded the moment it happens. Once a position outlives the flatten, the balance keeps moving, so the end-of-day figure is no longer evidence of the account’s state. Read the recorded failure on the account, never the closing snapshot. It is on Account details → Status, which shows the status change and the reason it was recorded with.

If a position is still open on a failed account:

1. Expect the platform to close it. The flatten runs on its own, and normally clears everything without anyone stepping in.
2. If it is still open, flatten it by hand. Pause the Accounts grid, then use Flatten on that row.
3. If a manual flatten does not close it either, tell the Tickblaze team on Slack. At that point it is a platform issue - do not try to resolve it by editing the account.

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A failure on an account that never traded

An account can show as Failed while having no trades, no positions and no orders in its entire history. It cannot have breached: equity never moved off the starting balance, so it never reached the failure threshold.

Check Account events before doing anything else. Two very different things look identical from the account list, and they need opposite responses:

What Account events shows	What it means	What to do
A manual failure, with the actor and timestamp	Someone failed the account deliberately.	Nothing is wrong. Leave it, or reverse it if the person acted in error.
No manual failure - it failed automatically	The account was marked failed when nothing could have failed it.	Recover it, and report it.

A failure with nothing behind it does not mean the account was set up wrong. The initial balance, the Global DD threshold and the failure threshold derived from them can all be correct; the account simply got marked failed when it should not have been.

If there is no manual failure behind it:

1. Reactivate the account. An authorized operator can set it back to Active from Account details → Status → Update status. The trader carries on with the same account.
2. Expect it to behave normally afterwards. Nothing about the account was ever below its failure threshold, so reactivating it does not leave it on the edge of failing again. Trades placed after reactivation go through like any other.

This only holds because the account never traded. Reactivating an account that failed on a genuine breach puts it straight back below its failure threshold - it fails again on the next tick. Bringing a real failure back needs its balance restored as well, which is what Account reset is for.

3. Tell the Tickblaze team. A failure with no trading and no manual action behind it points at something that needs investigating, even once the account is back up.

Everywhere else in these rules, a Failed status means equity genuinely reached the threshold. Check the account’s events for the breach before assuming otherwise - this case is the exception, not a general licence to disregard a failure.

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Session timing (EST)

Instrument	Session runs	Session closes - anchor moves up, daily limit resets	Next session opens
Stocks	4:00 AM – 4:00 PM	4:00 PM	4:00 AM next day
Futures	6:00 PM – 5:00 PM the next day	5:00 PM	6:00 PM the same day

Two different times, and they are an hour apart on futures. The close (5:00 PM) is when the session’s work happens - the end-of-day anchor moves up if the close was a new high, and the daily limit resets. The open (6:00 PM) is when trading resumes. An account stopped by a soft breach sits out the rest of the session and comes back at the 6:00 PM open, not at the 5:00 PM close. The hour between them is the daily break.

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Step-by-step examples

Drawdown scenarios

35 step-by-step examples with the full arithmetic - every drawdown type, with and without a daily limit, plus locking, breach mechanics, and swing.