Definition:
The daily drawdown is the maximum loss allowed in a single trading day.
In the PEI program, the daily drawdown limit is set at 4% of the initial balance.

This means that, during any trading session, losses (both realized and floating) cannot exceed this percentage.

Explanation:

• The daily drawdown is always calculated based on the initial account balance, not the current balance.

• Both closed losses and floating losses in equity are considered throughout the day.

• If, at any point, daily losses exceed the 4% limit, the account is automatically invalidated.

• This rule exists to protect both the trader and the firm from sudden drawdowns that could compromise the account in a single trading day.

Example 1 (basic case):

• PEI account of $10,000.

• Daily drawdown limit = 4% = $400.

If in one day the trader closes multiple trades and ends with a total loss of –$420, the account is invalidated for exceeding the daily limit.
On the other hand, if the daily loss is –$380, the limit has not been breached, and the account remains active.

Example 2 (floating losses case):

• PEI account of $25,000.

• Daily drawdown limit = $1,000.

The trader opens several trades and, even though they are not closed, the account equity falls to $23,950 (floating loss of –$1,050).
👉 Even if the trades are still open, the account is invalidated because the floating loss exceeded the daily limit.

In summary:

• The daily drawdown in the PEI is 4% of the initial balance.

• It applies to both closed and floating losses within the same day.

• This limit prevents a single bad trading day from jeopardizing the trader’s scaling plan and account continuity.