Maximum Drawdown
IntermediateHow max drawdown is calculated and how to avoid breaching it.
Maximum drawdown is the most critical rule in the challenge. It measures the maximum decline from your peak account balance. Breaching it results in immediate account closure.
Calculation Method
SPIKE uses a balance-based trailing drawdown during the challenge phase. The drawdown limit trails upward with your highest achieved balance but never exceeds the initial drawdown amount.
Example
| Event | Balance | Drawdown Floor |
|---|---|---|
| Start | $100,000 | $90,000 (10%) |
| Profit +$5,000 | $105,000 | $95,000 (trails up) |
| Profit +$3,000 | $108,000 | $98,000 (trails up) |
| Loss -$2,000 | $106,000 | $98,000 (stays) |
| Target reached | $108,000 | Challenge passed ✓ |
Risk Warning
Once the drawdown floor trails up, it never comes back down. This means early profits raise your minimum balance permanently. Manage risk carefully, especially after a winning streak.
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