The MAE rule limits how much you can lose on a single trade before it becomes a problem. It's one of the rules that confuses people most, so let's break it down clearly.

MAE stands for Maximum Adverse Excursion—basically, how far a trade goes against you before you close it. The rule says: the worst point of any single open trade can't exceed 30% of your profit cushion.

This isn't about your daily loss. It's not about your total P&L. It's about one trade—how much unrealized (floating) loss you're carrying at any moment on that specific position.

The Formula

Max Open Loss per Trade = Start-of-Day Profit × 30%

What's "profit cushion"? It's the realized profit sitting in your account above your starting balance. If you started with $50,000 and your account is now at $54,000, your profit cushion is $4,000. That's what the 30% is calculated from.

Numbers make more sense with examples. Let's say you have a $50,000 account and you've built up $4,000 in profits, so your balance is $54,000.

Your profit cushion

$4,000

Max open loss per trade (30%)

$1,200

This means any single trade you have open can show a maximum floating loss of $1,200. Go beyond that, and you're violating the rule.

Notice this is per trade. If you have three trades open, each one has its own $1,200 limit. The rule doesn't care about your total exposure—it looks at each position individually.

Good question. If your profit cushion is small (or zero), the rule doesn't just disappear. Instead, it defaults to 30% of your account's trailing threshold amount.

Your profit cushion is $0, so we use the trailing threshold ($2,500) as the base.

Max open loss per trade (30% of $2,500)

$750

With a small cushion, you have less room. This is by design—it protects you when you're most vulnerable.

Here's how the numbers work out for different scenarios:

Notice the $150K account with only $2,000 profit—even though it's a bigger account, the small cushion means very tight MAE limits. Your cushion matters more than your account size.

Here's some good news: the 30% cap can increase to 50% once you've built up enough profit. This gives you more breathing room as your account grows.

How to unlock 50%: When your end-of-day profit balance reaches 2× your Safety Net buffer, your MAE cap increases to 50% starting the next trading session.

Safety Net buffer on a $50K account = $2,600

To unlock 50%, your EOD profit needs to reach: $2,600 × 2 = $5,200

$1,560

max loss per trade

$2,600

max loss per trade

That's almost double the room. It rewards you for building your account responsibly.

Trader has $3,000 profit cushion. Max loss per trade = $900.

They enter a trade. It goes against them. Floating loss hits -$1,100.

"It's coming back," they think. They hold. It does come back. They close at +$200.

Problem: The MAE rule was violated the moment the loss hit -$1,100 (which exceeded the $900 limit). It doesn't matter that the trade ended profitable.

The rule tracks your worst point, not your exit. If your floating loss exceeds the limit at any moment—even for a few seconds—that's a violation. "It came back" doesn't fix it.

Trader has $4,000 profit cushion. Max loss per trade = $1,200.

They have 3 trades open:

Problem: Trade C exceeds the $1,200 limit. Even though the total loss is spread across multiple trades, each trade is judged individually.

Yesterday: Trader ended the day with $6,000 profit cushion. Max loss = $1,800.

This morning: They start trading, assuming they still have $1,800 of room.

But overnight, their cushion was recalculated. Due to some adjustments, it's now $3,500.

New max loss per trade = $1,050

Lesson: Always check your current cushion at the start of each day. Yesterday's numbers don't carry over automatically.

If you're on a static account (no trailing drawdown), the MAE calculation has some specific rules:

Static accounts have tighter limits when profits are low. Once you build up your cushion, you get more room.

Here's the nuance: a brief, small breach that you correct quickly might not trigger immediate action. The system looks at the severity and pattern of violations.

But repeated violations or significant breaches can lead to:

Don't test the limits. Even if small breaches don't immediately end your account, they're being tracked. A pattern of violations signals poor risk management—exactly what funded accounts are designed to filter out.

The 30% MAE rule limits how much any single trade can go against you.

It's based on your start-of-day profit cushion (or trailing threshold if cushion is low).

Each trade is judged individually. Multiple positions each have their own limit.

The limit can increase to 50% once your profit reaches 2× the Safety Net buffer.

Violations are tracked. Don't push the limits.

Here's a quick reference for default limits (assuming minimal profit cushion, using trailing threshold as base):

Remember: these are minimums. As you build profits, your MAE limit grows with your cushion.