Maximum Loss Limit (MLL) — your account-ending floor

Why this lesson exists

The Maximum Loss Limit is the single rule that ends an xtree account. Hit it and the account is terminated — every open position auto-flattened, the evaluation over. Nothing else on the platform does this. Not a bad day, not a string of losing trades. Only MLL.

If you remember one number from this entire module, remember the MLL floor of your account at any given moment. It is the line under your equity that you are trading above. Everything in this lesson — the cushion, the Day-1 carve-out, the trailing logic, the cap, the recovery math — is here so that you can answer one question on any trading day: how much room do I have right now?

This is also the most-bookmarked lesson on the platform for a reason. Read it twice.

The cushion and the floor

On the Standard account, the MLL cushion is $250 — 5% of the $5,000 starting balance. The MLL floor is the highest equity you have ever closed a trading day at, minus the cushion, and it is capped at your starting balance:

mll_floor = min(peak_equity − $250, $5,000)

peak_equity is the highest EOD (End-of-Day) Balance the account has ever closed at. Daily settlement on xtree happens at 00:00 UTC — at that moment, the trading day closes, your balance is crystallised, and that number is compared against the running peak.

This formula has three important properties:

1. The floor only ratchets up. A new peak raises the floor. A bad day cannot lower the floor; the peak is sticky.
2. The floor moves with you. As you make money, the threshold for termination rises with you, not in your favour. This is what "trailing drawdown" means.
3. The floor is capped at $5,000. It never rises above your starting balance, no matter how high your peak goes.

The breach test is real-time and intraday — every tick, realised plus unrealised P&L are summed into your live equity. If live equity dips below mll_floor, the engine auto-flattens every open position and terminates the account.

Day 1 is different — the static carve-out

There is exactly one carve-out, and it covers your first day of trading.

Day 1 starts on the trading day (00:00 UTC → 00:00 UTC window) that contains your first executed trade. You can activate your account on Monday but not trade until Thursday — Day 1 doesn't start until Thursday's first fill. On Day 1, the MLL is static at:

day1_mll_floor = startingBalance − $250
              = $5,000 − $250
              = $4,750

Static means it does not trail intraday. You can drift from $5,000 down to $4,760 and back up to $5,100 across Day 1 without breaching, even though peak_equity − $250 would have moved the floor up. The Day-1 carve-out exists because every new trader's first session is the noisiest and the most likely to draw down before they find their feet — terminating accounts on a Day-1 wobble would be brutal and unhelpful.

The instant Day 1 closes at 00:00 UTC, the rules switch. From Day 2 onward, the formula min(peak_equity − $250, $5,000) is in force and trails up after every profitable EOD.

Walking through five days

Standard $5,000 account. The trader places their first trade on Day 1. Here is the floor across the first week:

| Day | EOD Balance | Peak (after EOD) | MLL Floor (intraday next day) | |---|---|---|---| | 1 | $4,920 | $5,000 (the start) | $4,750 (static, Day 1) | | 2 | $5,080 | $5,080 | $4,830 (= $5,080 − $250) | | 3 | $5,180 | $5,180 | $4,930 | | 4 | $5,140 | $5,180 | $4,930 (peak unchanged → floor unchanged) | | 5 | $5,250 | $5,250 | $5,000 (= $5,250 − $250, at the cap) |

Notice four things. First, Day 1 closed at a small loss ($4,920) but never breached — the static floor at $4,750 gave room. Second, after Day 2's strong close at $5,080, the floor jumped from $4,750 to $4,830. The trader can no longer touch $4,750 without breaching. Third, on Day 4 the trader gave back some profits but the peak did not lower the floor — the $5,180 high-water mark from Day 3 stayed in force. Fourth, on Day 5 the floor reached $5,000 — its ceiling. Once your peak reaches $5,250, peak − $250 equals your starting balance and the floor can climb no higher.

This is the trailing drawdown working as designed. The floor follows you up the staircase but does not follow you back down, and it stops at your starting balance.

The floor caps and locks at $5,000

The floor never rises above your $5,000 starting balance. The moment your peak EOD balance reaches $5,250, peak_equity − $250 hits $5,000 and the floor is effectively locked there:

locked_mll_floor = startingBalance = $5,000

It stays at $5,000 for the rest of the evaluation, regardless of what your equity does next. You can run up to $5,800, give back $700, and never breach. You cannot fall below the $5,000 you started with.

This is intentional. Once you have banked enough of a buffer that the trailing floor reaches your start, the platform stops trailing the drawdown against you. The risk being measured shifts from "can you avoid blowing up" to "can you operate consistently." (Passing the evaluation is a separate bar — a $500 profit, i.e. an EOD balance of $5,500 — covered in the evaluation-rules lessons.)

Why MLL exists at all

xtree's evaluation accounts are simulated — no real money is at risk inside the account. But funded-account payouts are real, and the platform's capital backs them. MLL is the downside cap on each seat: it bounds the maximum drawdown the platform takes responsibility for on a funded trader.

The number — $250 — was chosen so that it is large enough to absorb normal-day variance on a 1%-risk strategy (a 1% risk is $50, so five losing trades is $250 — which would fail a Day-1 trader, but the Day-1 carve-out covers exactly that case), and small enough that account-killing reckless trades hit it quickly. The 5% cushion is roughly a handful of normal losing trades plus a little slack.

For the outside-facing version: MLL is the platform's commitment that no trader can produce an unbounded loss inside a seat. For you, the trader: MLL is the rule that forces you to size for survival before strategy.

Drawdown-recovery math

The asymmetry that makes MLL so important is geometric, not linear. Losses and recoveries are not symmetric percentages.

Equity drops from $5,000 to $4,900 — a 2% drawdown.

recovery_needed = $100 / $4,900 = 2.04%

Almost symmetric. Now drop further:

| Drawdown | Equity left | Gain required to recover | |---|---|---| | 5% | $4,750 | 5.26% | | 10% | $4,500 | 11.11% | | 20% | $4,000 | 25.00% | | 50% | $2,500 | 100.00% | | 75% | $1,250 | 300.00% |

A 20% drawdown requires a 25% gain to recover. A 50% drawdown requires a 100% gain. This is why position sizing matters before strategy — see lesson 2.1 position sizing — and why the MLL cushion is small. The platform is not waiting for you to climb out of a 30% hole; the rule cuts the account before holes get that deep.

Worked example — drawdown into MLL

Standard $5,000 account. The trader closed Day 3 at $5,180. Day 4 begins with the MLL floor at $4,930 ($5,180 − $250). They have $250 of cushion above the floor.

They put on a 10× xBTC long at $85,000 with 0.1 BTC — notional $8,500, margin $850. No stop. (This is the mistake; the lesson is in what happens next.)

BTC drops 1.5% to $83,725. Unrealised loss = 0.1 × $1,275 = $127.50. Live equity: $5,180 − $127.50 = $5,052.50. Still above floor. The trader holds, expecting a bounce.

BTC drops another 1.5% to $82,400. Unrealised = 0.1 × $2,600 = $260. Live equity $4,920. Breach. Floor was $4,930. The engine flattens the position at market. Realised loss $260. Final balance $4,920 — and account terminated.

Two lessons. First, the MLL terminates on live equity ≤ floor, not on balance ≤ starting balance. At the last close the trader was $180 in profit ($5,180 vs. a $5,000 start); a single 3% move still terminated them, because the floor had trailed up to $4,930. Second, a 3% adverse move on a 10× position with no stop was enough to wipe the $250 cushion. Position sizing matters not just for normal losses but for tail scenarios.

The Free Reset

xtree gives one Free Reset per evaluation for an account terminated by MLL breach, within your 30-day window. The reset:

• Returns the account to $5,000 starting balance
• Resets MLL state (including the Day-1 carve-out — the next first-trade day becomes the new Day 1)
• Resets the day counter and consistency state
• Does not extend or restart your 30-day window, and does not require a new $50 fee

It is exactly one per evaluation. Burn the reset and the next MLL breach ends the evaluation. The Free Reset is not available for accounts terminated by fraud-classified violations.

The reset exists because Day-1-style noise can stomp newer traders despite the carve-out, and a single bad session shouldn't push someone off the platform. It is not a get-out-of-jail card for reckless trading — you get exactly one.

Common misunderstanding

"I'm still above my starting balance, so MLL can't apply to me."

Wrong, and it's the most expensive misunderstanding on the platform. MLL trails against your peak, not against your starting balance. A trader who runs the account up to $5,200 and then draws back down to $4,945 has breached the MLL floor of $4,950 — even though they are still $55 below their peak and only just under the $5,000 start.

The floor that matters is not "$5,000 minus the cushion." It is "highest EOD I have ever closed at, minus the cushion, capped at $5,000." Always know your peak. Most trading dashboards on xtree display the current floor explicitly — look at it before you click buy.

The floor stops trailing once it reaches its $5,000 cap (peak EOD ≥ $5,250), at which point it permanently sits at $5,000. Until then, every profitable EOD raises the bar.

Recap

• MLL is the only rule that terminates an xtree account. Breach is real-time, intraday, realised + unrealised.
• Floor formula: min(peak_equity − $250, $5,000). Trails up, never down, never above $5,000.
• Day 1 is static at $4,750 — only the day containing your first fill.
• Once peak EOD reaches $5,250, the floor locks at $5,000 for the rest of the evaluation.
• Drawdown recovery is geometrically harder than the drawdown itself. 20% down = 25% up.
• One Free Reset per evaluation for MLL-terminated accounts. Don't rely on it.

Next up: a self-imposed day-stop that pauses the day instead of killing the account — the Personal Daily Stop.

Test yourself

Next lesson: Personal Daily Stop (PDL) — a self-imposed day-stop that pauses the day instead of killing the account.