2% Flowing Risk Rule

The Flowing Risk Rule differs from the Daily Stop Loss limit. Traders can easily use their 5% Daily Stop Loss, but they must be aware that in any single trade or group of simultaneous trades, no more than 2% of the account should be put at risk.

• This limit is imposed to prevent excessive balance or equity depletion within a short period.

For example, in an account with a balance of $100,000 before opening trades, the trades should not be positioned in a way that more than $2,000 is lost in one or multiple simultaneous trades (whether in equity or balance). The account’s balance should not drop below $98,000 due to one or more simultaneous trades.

This rule assists in risk management and reduces excessive capital loss per trade while still allowing full use of the daily drawdown limit. The basis for calculating this 2% is the last account balance before opening any trade.

If the allowed risk is breached outside of the times for economic red news announcements or major financial events causing sharp market fluctuations, due to slippage, it is not considered a violation.

In demo challenges and the funded accounts, if the Flowing Risk Rule is not adhered to, the trading account will be breached and deactivated. This rule does not apply to accounts with a balance of $25,000 or less.

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