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Why was my account closed when the trade came back?
The trade finished green. The account didn’t survive it. At many firms the line that closes your account is checked against your open profit and loss the whole time, not just against trades you’ve closed.
Balance vs equity
- Balance: your account after closed trades only.
- Equity: your balance plus whatever your open trade is up or down right now.
Most drawdown rules watch your equity. The moment it touches the line, the account is closed and your position is flattened. The trade never gets the chance to come back.
One trade, worked through
Example: a $50,000 account with a $2,000 drawdown. The line is at $48,000 and your balance is $49,000, so you have $1,000 of room. A trade goes against you by $1,050 before it turns and would have closed $300 in profit.
On the chart, the trade was a winner. On the account, it was the end. What mattered was the worst moment of the trade, not how it finished.
“But my drawdown is end-of-day”
End-of-day usually describes when the line moves: it follows your closing balance, not your open profit. At many firms the account can still be closed the moment your equity touches the line during the day. Read your firm’s wording for both parts: when the line moves, and when touching it counts.
Why the rule works this way
The drawdown is the most the firm has agreed you can lose. If it only checked closed trades, one open position could lose far more than that before anyone saw it. Checking equity is how the limit stays a limit.
What to do with this
- Your stop is your worst moment. Size so a full stop-out fits inside your room, with some left over. The position size calculator works it out.
- Check your room before every trade, not your balance. The rule decoder draws your line and your room.
- Leave a gap for fast markets. In a fast move your stop can fill worse than the price you set. Don’t size so the stop sits right on the line.
How much room do you have right now?
Your drawdown type, your balance, your highest point. Your line and your room, drawn.
Track it as you go
The Rules Desk Journal & Workbook is a 500-row trade log that works out your win-rate range, break-even, average result per trade and what rule breaks cost you. $39, instant download.
Educational material only. Not investment advice. Trading futures involves substantial risk of loss and most people who try it lose money. Check your account rules with your firm; they change.