A funded-account evaluation gives you a fixed amount you may lose before the account is closed. A strategy has a worst losing stretch. If the second number is bigger than the first, the account fails while the strategy does exactly what it did in testing. You can check this before paying the fee.
Put both numbers in R
R is the amount you risk on one trade. Measuring in R lets you compare an account rule with a strategy result.
Your strategy's worst drawdown in R comes from your own trade record: the largest peak-to-trough fall, counted in units of risk.
A worked example
Suppose a strategy has been tested over a large number of trades, with an average result of +0.13R per trade and a worst drawdown of 13.65R. Suppose the evaluation allows $2,000 of loss and has a $3,000 profit target.
| Risk per trade | Room | Against a 13.65R drawdown |
|---|---|---|
| $200 | 10R | Fails |
| $150 | 13.3R | Fails, narrowly |
| $100 | 20R | Holds |
At $200 a trade the strategy's ordinary bad stretch closes the account. At $100 it fits, with space left over.
Then count the time
Smaller risk means the target is further away in R.
$3,000 ÷ $100 = 30R
30R ÷ 0.13R ≈ 225 trades
If the strategy takes two trades a day, that is about five months. The evaluation is passable, but slowly. That is the real trade-off, and it is better known before the fee is paid.
Two cautions
- Expect the live drawdown to be worse than the tested one. A common rule of thumb is to want room of at least one and a half times the worst drawdown you have seen.
- Check how the firm measures the loss limit. Some move the limit up as the account grows, and some measure it during the day instead of at the close. Both leave you less room than the headline figure. Read the firm's own rules page.
The check: loss room ÷ risk per trade must be comfortably larger than your worst drawdown in R. If it is not, reduce the risk per trade until it is, then decide whether the time it takes is acceptable.