Drawdown Reset
What happens after a drawdown breach — typically account closure, though some firms offer a paid reset option.
Definition
A drawdown reset is the firm's policy for what follows a drawdown breach. Most firms close the account permanently on a max drawdown breach — the trader loses the challenge fee and must buy a new evaluation to continue. Some firms offer a paid reset: a fee (usually 30–50% of the original challenge fee) that restores the account to its starting balance and rule limits. A breach during the evaluation phase typically means buying a new challenge; a breach on a funded account is almost always permanent.
Example
Why It Matters
Reset fees are often not disclosed until after a breach happens, and the economics matter: paying 30% of the original fee to restart is usually better than buying a new challenge at full price — but only if the trader can identify and fix the mistake. Firms that advertise 'unlimited resets' are typically using reset fees as a profit center; the reset is a feature, not a rescue.