What drawdown means
Drawdown is how far an account has fallen from a reference point. Trading assessments use it to define loss limits: the most an account may lose before the attempt ends. Different limits use different reference points, which is where most confusion comes from.
Two words matter. Balance is the value of the account from closed trades only. Equity is the balance plus the profit or loss on positions that are still open. Loss limits on IndieFunded are measured on equity, so an open losing position counts before you close it.
Daily loss limit
The daily loss limit is measured from your balance at the start of each trading day. If equity falls below that starting point by more than the daily percentage at any moment, the limit is breached.
Daily floor = start-of-day balance × (1 − daily loss %)
| Example, 3% daily limit | Value |
|---|---|
| Balance at start of day | ₹1,02,000 |
| Daily loss allowed (3%) | ₹3,060 |
| Equity must stay above | ₹98,940 |
The floor resets each morning from the new starting balance. A good day raises tomorrow's floor; a bad day lowers it.
Overall (static) loss limit
The overall loss limit is a fixed floor below your starting balance, set when the account opens. It never moves. As you build profit, the distance between your equity and the floor grows.
Overall floor = starting balance × (1 − overall loss %)
| Example, 6% overall limit | Value |
|---|---|
| Starting balance | ₹1,00,000 |
| Overall floor | ₹94,000 |
| Room left if equity is ₹1,04,000 | ₹10,000 |
Trailing loss limit
A trailing limit follows your highest equity upwards but never moves down. On IndieFunded's Instant programme the 5% limit trails your highest equity until you are 5% up, then locks at your starting balance for good.
| Highest equity so far | Trailing floor |
|---|---|
| ₹1,00,000 (start) | ₹95,000 |
| ₹1,02,000 | ₹97,000 |
| ₹1,05,000 | ₹1,00,000, locked from here |
| ₹1,09,000 | ₹1,00,000 |
The trailing limit is stricter early on: a quick gain followed by a pullback can breach it even while the account is still above its starting balance.
Habits that keep you inside the limits
- Set a personal daily stop below the official one, for example 2% when the limit is 3%, so slippage never decides for you.
- Know your floors before the session starts. Write them down.
- Size positions so that one losing trade costs a small fraction of the daily limit. See the position sizing guide.
- Do not add to a losing position to 'average down'. It increases the loss that counts against the limit.
- Remember that open positions count. A trade you have not closed can still breach a limit.
Examples are illustrative