What is Maximum drawdown?

Maximum drawdown is the largest fall from the highest point of your account balance that a firm allows before the account breaks its rules. Prop firm challenges use it alongside a daily loss limit, and breaching it usually ends the account.

The limits differ. Alpha Capital Group allows 4% to 10%, City Traders Imperium allows 5% to 10%, Blue Guardian allows 6% and E8 Markets allows 6%. Earn2Trade sits tighter, at 3.5% to 6%.

A smaller number is the tougher test. It caps how much of your own capital one bad run can cost before you must stop.