The Lock on Payout (EOD Trailing Drawdowns)
Q: What is the Lock on Payout and how does it affect my drawdown?
A: The Lock on Payout applies exclusively to Funded accounts operating under an End-of-Day Trailing Drawdown model. When you receive your first approved payout, your trailing drawdown stops moving and permanently "locks" at your original starting (initial) balance.
From that moment onward, your trailing drawdown converts into a static floor. If your account equity ever drops below your initial starting balance, your account will suffer a Hard Breach (Maximum Total Loss) and be terminated.
How the Lock on Payout Works in Practice
Let’s assume you are trading a $100,000 Funded account with an 8% ($8,000) trailing drawdown.
1. The Gain: You trade successfully, and your account high-water mark reaches $110,000.
2. The Trailing Floor: Your drawdown floor trails $8,000 behind your highest equity point, currently sitting at $102,000.
3. The Payout: You close all active positions and request a profit payout of $5,000.
4. The Lock: Because your payout was approved, the trailing mechanism is disabled. Your drawdown floor drops and permanently locks at your initial starting balance of $100,000.
5. The Result: Your new active account balance is $105,000, and your hard breach level is strictly fixed at $100,000. You now have exactly a $5,000 equity buffer to trade with.
Managing Your Risk After a Payout
⚠️ Important Strategic Implication If you request a large payout that takes out the vast majority of your profits, you will leave yourself with a very thin drawdown buffer. This significantly increases your risk of accidentally breaching the account during normal market volatility on your next trades.
To manage your risk effectively, we highly recommend utilizing one of the following two strategies:
Strategy A (Maintain a Buffer): Request smaller, incremental payouts. This allows you to lock in realized profits while leaving a healthy drawdown cushion in the account to absorb future market noise and continue trading safely.
Strategy B (Start Fresh): Request a payout of all your allowable profits at once. While this will likely leave your current account with an unworkable buffer (or close it entirely), you can use a portion of those profits to purchase a new challenge and start fresh with fully reset risk parameters.