How Is Drawdown Calculated?

Drawdown Calculation

Drawdown represents the reduction in account equity, including both:

• Floating PnL
• Closed PnL

OneFunded uses Equity-Based Drawdown calculations.

This means:

• Floating losses immediately affect drawdown
• Open positions can trigger breaches
• Equity, not balance, determines rule compliance

Example:

Account Size: $5,000
Daily Drawdown Limit: 5% ($250)

Daily Drawdown Limit is fixed to initial account balance and is not changing together with equity changes.

At 00:00 UTC:

• Two open positions show floating profit of +$200
• Start-of-Day Equity = $5,200

Daily loss allowance:

• 5% of $5,000 = $250

Max Drawdown at which account gets closed:

• $5,200 - $250 = $4,950

Later:

• Floating profit increases to +$500
• Equity rises to $5,500

Then:

• Floating profit falls to +$150
• Equity drops to $5,150

Intraday equity reduction is $350. But account remains active, because Max Drawdown ($4,950) hasn't been reached yet.

Then:

• Floating profit falls to -$50
• Equity drops to $4,950

This exceeds the permitted daily loss limit of $250 and constitutes a breach, even though no positions were closed and the account remains in floating profit.

This rule is enforced to promote disciplined risk management practices among traders and to help ensure prudent control of the risk on the account.

Definition of Trade Idea

Risk rules at OneFunded are applied at the level of the trade idea, not individual positions.

A trade idea represents the combined exposure of all positions expressing the same underlying directional market thesis.

Positions may be aggregated when they:

• Trade the same instrument
• Trade correlated instruments
• Share the same directional bias
• Overlap in execution timing
• Depend on the same macroeconomic thesis

Correlated Exposure

Positions may be considered correlated when:

• Correlation coefficient is approximately 0.80 or higher
• Instruments belong to the same asset class
• Instruments historically move together
• Market structure produces similar directional behavior

Examples of correlated instruments:

• NAS100 / US30 / SPX500
• XAUUSD / XAGUSD
• BTCUSD / ETHUSD
• EURUSD / GBPUSD

OneFunded aggregates all correlated directional exposure when evaluating:

• Floating drawdown
• Risk concentration
• Margin utilization
• Exposure thresholds

Artificially dividing one large exposure into multiple correlated positions does not reduce total measured risk.

We want to ensure that the trader maintains consistent risk management across the overall trade idea, rather than assessing each position in isolation. When assets are correlated, losses can accumulate quickly across multiple positions, so this rule helps limit concentrated exposure and supports more prudent risk control.