My Forex Funds has a daily drawdown rule that works differently from most other online prop firms. It has advantages and disadvantages, but traders that don’t fully understand it can end up failing their evaluation or even losing their funded account.
Which balance is used to calculate MFF daily drawdown?
My Forex Funds’ maximum daily drawdown is 5%, but unlike other prop firms, this is calculated by equity and balance, whichever is higher at the start of the day. Equity = account balance + floating profits/losses.
When there is a floating loss, balance will be higher so it will be used to calculate daily drawdown.
If there is a floating profit, equity will be higher so it will be used.
When there are no open trades equity = account balance, so they are both used.
You then take 5% of these for your daily maximum drawdown. This drawdown is calculated at 5:00pm EST, which may be different to your local timezone, so use this website to check EST time.
My Forex Funds vs FTMO daily drawdown
Let’s start with some examples to show how this rule can be better and worse than other prop firms, when there are no trades open at the start of the day.
With an account at $95000 balance, the 5% my forex funds daily drawdown is $4750 so minimum daily equity is $90,250, but FTMO has a fixed daily drawdown of $5000 so minimum daily equity will be $90,000. So in this case FTMO allows more daily drawdown.
But with an account at $120,000 balance, the 5% my forex funds daily drawdown is $6000, while the FTMO daily drawdown stays at $5,000. This means as you grow your MFF account, the daily drawdown grows too.
What happens when trades are open at the start of the day?
This rule gets more complicated when there are open trades at the start of the day.
If at the start of the day, you are in a trade with $5,000 floating profit and $100,000 balance, your equity is $105,000. As your equity is highest it is used to calculate your 5% daily drawdown of $5250. This means minimum daily equity will be $99750.
So, if on that day your trade reverses into a $250 loss, you will hit the daily drawdown and lose the account.
On FTMO only balance is used so the minimum daily equity would have been $95,000 instead of $99750 and you would still have the account.
How to avoid breaking the My Forex Funds daily drawdown rule
So how can you avoid breaking this rule and losing your account?
Use lower risk
If you were to use 0.5% risk per trade instead of 1% like in the previous example, you are less likely to lose your account to max daily drawdown.
Use a trailing stop loss
If you are going to use higher risk, consider using a trailing stop to lock in profits in case price reverses against trades already in profit.
Know what your drawdown limits are
Make sure to check your dashboard, as this will show you all your exact drawdown limits for the day.
What do you think about this daily drawdown rule? is this a dealbreaker for you? Feel free to comment below. If you enjoyed this article check out our other posts on this site, or our YouTube if you prefer videos!
