Understanding Max Daily Loss (MDL) in Trading Strategies

Introduction

This explanation walks you through the Max Daily Loss (MDL) feature in Titan's settings, which is part of the equity protector. This setting helps to automatically stop a trading strategy after reaching a certain loss threshold within a day. Here's a breakdown of how it works:

What is Max Daily Loss (MDL)?

• MDL tells the strategy when to stop for the day after losing a certain amount. For example, if the MDL is set to $2,000, the system will stop trading after that amount is lost.
• There are three main types of MDL:
• MDL Balance
• MDL Equity
• MDL Highest Value
  
  

1. MDL Balance

• This is used by firms like FTMO or FXIFY.
• It is based on the account's balance, which refers to the realized profit/loss before open trades are taken into account.
• Balance = the last balance before new trades.
• Equity = the current account value, including floating profits/losses (open trades).
  
  

Example:

• If your account is worth $103,000 (with $1,000 in open trades), the balance would be $102,000, and the equity would be $103,000.
• If your MDL is 5%, it would be based on the balance ($102,000), so the maximum loss would be $5,100 for that day.
• If your equity drops to $101,000 due to a loss, but your balance is still $102,000, your maximum allowable loss would still be $5,000 based on the balance.
  
  

2. MDL Equity

• MDL Equity is based on the current account value, including open trades.
• This means that the system evaluates the account's current equity, regardless of what the balance was before.
  
  

Example:

• If your equity is $101,000 and your balance is $102,000, it doesn’t matter; your MDL will be based on equity.
• So, with an MDL of 5%, you'd have a $5,050 allowable loss, even though your balance is different.
  
  

3. MDL Highest Value

• This feature uses the highest value between the balance and equity to calculate the maximum allowable loss.
  
  

Example:

• If your balance is $101,000 and equity is $102,000, the system will calculate the MDL based on the higher value of $102,000.
• If your equity drops to $101,000, the MDL will still be calculated based on the higher balance, allowing for a $5,000 loss.
• Conversely, if your equity is higher than your balance, the MDL will be calculated based on the higher equity value.
  
  

Summary

• MDL Balance: Based on your last recorded balance before new trades.
• MDL Equity: Based on your current equity, including floating profits/losses.
• MDL Highest Value: Uses whichever is higher between balance and equity to calculate max loss.
  
  

Understanding these differences can help you anticipate when your trades will be closed if held overnight, or when your strategy might stop trading based on losses.