Relative drawdown refers to the calculation based on the last High Water-Mark balance, representing the peak closed account balance within a specified period.

For example, consider an account with an initial balance of $100,000 and a relative drawdown of 6%. Consequently, the relative drawdown loss-level limit is set at $94,000. However, once you realize profits on the account and the balance increases above the initial amount, for instance to $101,000, the relative drawdown percentage of 6% will then be applied to the new balance, adjusting the relative drawdown level to $95,000. Once the account reaches profit in the amount of relative drawdown, the relative drawdown will lock to the initial balance and won’t be moving further anymore. In this particular case, this will happen after the account reaches $ 106,000 in balance.

Definition of High Water-Mark: The term 'high water-mark' denotes the maximum account balance achieved, recorded at $100,000 in this context.