The Maximum Loss Limit is a crucial rule designed to protect your trading capital by setting a threshold that your equity or balance cannot go below. This limit is a percentage of the initial account size and varies depending on the specific model you choose.

Understanding the Maximum Loss Limit

For instance, if you opt for a $100,000 account under our 2-Step model and the Maximum Loss Limit is set at 10%, your equity or balance must not fall below $90,000 at any point. Here’s how it works:

1. Initial Account Size: $100,000
2. Maximum Loss Percentage: 8%
3. Maximum Loss Calculation: $100,000 * 8% = $8,000

Practical Example

Let's consider a practical example with a $100,000 account:

• Initial Balance: $100,000
• Maximum Loss Limit: 8% of $100,000
• Maximum Loss Amount: $8,000

This means that your equity or balance cannot drop below $90,000. If at any moment your equity or balance goes below $90,000, the Maximum Loss Limit rule is triggered.

Summary:

• Account Size: $100,000
• Maximum Loss Limit: $8,000
• Threshold Equity/Balance: $80,000

If your equity/balance drops below $80,000 at any specific moment, the Maximum Loss Limit rule will be enforced. This safeguard ensures that your losses are capped, helping you manage risk effectively while trading.

The Maximum Daily Loss Limit is an important safeguard that dictates the maximum amount you are allowed to lose in a single day. This rule helps you manage your risk by setting a daily loss cap based on the higher value between your starting equity or balance for the day.

Understanding the Maximum Daily Loss Limit

Each trading day, the Maximum Daily Loss Limit is calculated as a percentage of your starting equity or balance, whichever is higher. This ensures that you have a clear threshold for your daily losses, helping you stay within manageable risk parameters.

• Starting Equity/Balance: The rule uses the higher value between your equity and balance at the beginning of the day.
• Daily Calculation: The equity of the day, which includes the floating Profit and Loss (PnL) along with all closed positions of that day, must not breach the Maximum Daily Loss Limit.
• Reset Time: The daily maximum loss resets at 00:00 IST server time each day, giving you a fresh start.

Practical Example

Here’s an example to illustrate the Maximum Daily Loss Limit:

• Initial Account Size: $100,000
• Daily Maximum Loss Percentage: Assume it is 5%

Calculation:

• Starting Balance for the Day: $100,000
• Maximum Daily Loss Calculation: $100,000 * 5% = $5,000

This means that your equity/balance must not fall below the starting balance minus the Maximum Daily Loss Limit. If your floating PnL and closed positions for the day result in a loss that exceeds $5,000, the Maximum Daily Loss Limit will be triggered.

Summary:

• Account Size: $100,000
• Maximum Daily Loss Limit: $5,000
• Threshold Equity/Balance for the Day: $95,000 (Starting Balance - Maximum Daily Loss)

If your equity/balance goes below $95,000 at any specific moment within the day due to your trading activities, the Maximum Daily Loss Limit will enforce a stop.

By adhering to the Maximum Daily Loss Limit, you can effectively manage your risk on a day-to-day basis, ensuring that no single day of trading can significantly impact your overall trading capital.

At PropScholar, maintaining active account usage is essential. If no trading activity occurs for 14 consecutive calendar days, the account will be permanently suspended without the possibility of reactivation.

Key Points:

1. 14-Day Inactivity Period
   • The 14 days are consecutive calendar days, including weekends and holidays.
   • Trading activity must occur within this period to avoid suspension.
2. No Reactivation
   • Accounts suspended due to inactivity cannot be reactivated.
3. Daily Cycle
   • A day is defined by a 00:00 UTC to 00:00 UTC cycle. For instance, Monday 00:00 UTC to Tuesday 00:00 UTC counts as one day.

Why This Rule Matters:

• Efficiency: Ensures platform resources are reserved for active traders.
• Security: Reduces risks from dormant accounts.
• Engagement: Encourages consistent trading activity.

Summary:

The inactivity rule ensures a dynamic and secure trading environment. Accounts inactive for 14 consecutive days will be permanently suspended, with no reactivation option available.

At PropScholar, we uphold strict trading objectives to foster a fair and disciplined trading environment. If you breach any trading objective, specific actions will be taken to address the violation while maintaining the integrity of the review process.

Notification and Monitoring

• Daily Review by Risk Management: Our risk management team reviews all accounts daily at 00:00 UTC. If a trading objective is breached, it will be identified during this review.
• Email Notification: If a breach is detected, you will receive an email notification the next day outlining the details of the breach.

Why This Rule is Necessary

• Maintaining Discipline: Enforcing trading objectives encourages responsible and strategic trading practices.
• Protecting Capital: The review process helps safeguard your trading activities within set boundaries.
• Ensuring Fairness: All traders are held to the same standards, creating a level playing field.
• Transparency and Accountability: Clear communication ensures you are informed and able to learn from the breach.

Summary

Breaching a trading objective at PropScholar results in a thorough review by our risk management team. Notifications are sent via email, providing transparency and guidance to help you improve and align with our trading standards.

PropScholar does not impose any restrictions on news trading, meaning traders are fully permitted to trade during news events without limitations.