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Passing the drawdown rule

The one routine that decides most evaluations: size every call to survive a bad week.

You do not need a better strategy to pass an evaluation; you need a sizing routine that makes the drawdown cap mathematically hard to hit. The four steps below turn the abstract “respect the cap” into numbers you run before each trade.

The routine, in four steps

1. Read both limits before you trade

Write down the profit target, the maximum drawdown and any daily loss limit. The drawdown is the wall; the target is the destination. Knowing both as percentages lets you do the only calculation that matters: how many losses in a row would end the account at your chosen size.

2. Pick a survivable risk per trade

Risk a small fixed fraction — commonly around 1% — of the account on every call. Against a 10% drawdown, 1% means ten straight full losses to end the account, which a reasonable win rate makes unlikely. The exact number is yours to choose, but choose it so that a believable bad run leaves you clear of the floor. This is the test in full on respecting the maximum drawdown.

3. Let the grade set the size inside that risk

Within your fixed risk, the conviction grade decides how much to deploy: full size on A and B calls, less on C, none on D. That concentrates risk on the calls most likely to win and keeps the weak ones small, which moves you toward the target without enlarging the worst case. The grade system is on conviction grades you can size by.

4. Count to the target in small wins

Reach the target through many evenly sized wins, not one heroic session. This is what keeps you inside the consistency rule at the same time — the even curve is a free by-product of fixed sizing. Patience is the strategy; the sizing is what makes patience safe.

The three walls of a funded-trader evaluationDiagram: an equity curve must rise to the profit target (the ceiling you must reach), must never fall to the maximum drawdown floor (the line that ends the account), and must climb evenly enough to satisfy the consistency rule (no single day too large a share of the total). Clearing all three at once is what passing means.PROFIT TARGET — reach this to passMAX DRAWDOWN — touch this and the account endsCONSISTENCY: no day too large a slice →equity
Passing is a three-part constraint, not a single number: climb to the target, stay off the floor, and keep the climb even. A graded, drawdown-aware method is built for exactly this.
Worked example · illustrative

Round numbers for the walkthrough, not a specific program. Run the same arithmetic on whatever rules you face.

  1. The rules. Target +8%, max drawdown 10%, daily loss limit 5%.
  2. The size. Risk 1% per call. A five-loss day costs 5% — it stings and hits the daily limit, but the account survives and the next day resets.
  3. The grade. Of, say, twenty calls in a week, lean on the handful graded A or B; that is where the 1% goes in full, while C calls take a fraction and D calls are skipped.
  4. The arithmetic to the target. At a 70% strike rate with roughly even win and loss sizes, a steady drip of 1% wins clears +8% over a few weeks — no single day large enough to threaten the cap or the consistency rule.

The lesson is not the specific percentages; it is that passing is an arithmetic of survival. Set the size so the cap is hard to hit, and the target becomes a matter of time rather than nerve.

Keep going
Respecting the drawdownThe wall this routine is built to clear.Grades you can size byHow conviction decides where the risk goes.Choosing a holding clockMatching your model to the evaluation timetable.How we judge a passing planThe full five-test method.