How is the Daily Simulated Drawdown calculated in the Lightning Challenge/Funded?

The Lightning Challenge is a one-phase trading evaluation with strict risk management rules, incorporating a fixed simulated ​daily drawdown is 3% based on the initial/starting account balance.
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The drawdown is recalculated and resets daily at 5 PM EST.
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Daily Drawdown (Equity/Balance) Limit = End-of-Day Balance − (Initial Account Balance × 3%)

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✅ Example 1: Starting Drawdown
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Consider an account that starts with a $100,000 initial/starting account balance. With a daily drawdown limit of 3% on the initial/starting balance, the permissible loss for the day is $3,000. This sets the account’s lower threshold at $97,000.
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The 3% or $3,000 daily loss limit will always be subtracted from the end-of-day balance.
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So Any drop below the $97,000 threshold — whether in equity or balance — will be considered a breach of the daily loss limit.

✅ Example 2: Net Profit Impact on Drawdown
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Consider an account that starts with a $100,000 initial/starting account balance. In a scenario where a trader’s account balance increases from $100,000 to $103,000 due to a $3,000 profit from closed trades, the drawdown calculations are adjusted the following day. Starting with a new day balance of $103,000, since the 3% daily drawdown is calculated from the initial/starting account balance, which is $3,000, this sets the new threshold at $100,000.
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The 3% or $3,000 daily loss limit will always be subtracted from the end-of-day balance.
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So Any drop below the $100,000 threshold — whether in equity or balance — will be considered a breach of the daily loss limit.

✅ Example 3: Net Loss Impact on Drawdown
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Consider an account that starts with a $100,000 initial/starting account balance.
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In a scenario where a trader’s account balance drops from $100,000 to $97,000 due to a $3,000 loss from closed trades, the drawdown calculations are adjusted the following day. Starting with a new day balance of $97,000, since the 3% daily drawdown is calculated from the initial/starting account balance, which is $3,000, this sets the new threshold at $94,000.
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The 3% or $3,000 daily loss limit will always be subtracted from the end-of-day balance.
​

So Any drop below the $94,000 threshold — whether in equity or balance — will be considered a breach of the daily loss limit.

✅ Example 4: Impact of Floating Profits
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Consider an account that starts with a $100,000 initial/starting account balance.

If a trader has an open position showing an unrealized profit of $2,000 at the time of the daily drawdown reset (5 PM EST), the equity becomes $102,000 while the balance remains $100,000. However, the 3% daily drawdown is still calculated from the initial/starting account balance. Therefore, the loss limit remains $3,000, setting the threshold at $97,000.
​
The 3% or $3,000 daily loss limit will always be subtracted from the end-of-day balance.
​

So Any drop below the $97,000 threshold — whether in equity or balance — will be considered a breach of the daily loss limit.

✅ Example 5: Impact of Floating Losses
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Consider an account that starts with a $100,000 initial/starting account balance.

If a trader has an open position showing an unrealized loss of $2,000 at the time of the daily drawdown reset (5 PM EST), this brings the equity down to $98,000 while the balance remains $100,000. However, the 3% daily drawdown is calculated from the initial/starting account balance. Therefore,, the loss limit remains $3,000, setting the threshold at $97,000.
​

The 3% or $3,000 daily loss limit will always be subtracted from the end-of-day balance.
​

Any drop below the $97,000 threshold — whether in equity or balance — will be considered a breach of the daily loss limit.

​These examples illustrate the daily recalibration of risk limits based on either the closing balance or the higher equity value, ensuring traders manage their risks effectively while aiming for profitability in the Lightning Challenge.
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​Note: Please ensure that your equity and balance do not fall below the daily loss limit or maximum loss limit, whether due to floating losses on open trades or realized losses on closed trades. Breaching these limits will result in the termination or cancellation of your account.