Public policy updated: 27 October 2026
What Is Trade Risk?
Trade risk is the maximum potential loss on a position if the market moves against you. It is typically defined at entry using a stop-loss (SL).
Note: Stop-losses are not mandatory, but they are strongly recommended. Using an SL makes risk measurable at entry and helps you remain compliant with Funded2’s risk parameters.
How Trade Risk Is Calculated
Funded2 estimates risk using the distance between entry price and stop-loss, multiplied by position size.
Formula:
Buy (Long):
(Entry Price − Stop Loss) × Lot Size × Contract Size
Sell (Short):
(Stop Loss − Entry Price) × Lot Size × Contract Size
This calculation represents the estimated loss if the stop-loss is hit.
Trading Without a Stop-Loss
On funded and Instant accounts only, combined open losses on the same instrument must stay within 50% of the applicable configured loss allowance, recalculated from the previous day's end-of-day (EOD) balance. Use the trailing allowance percentage for trailing products; otherwise use the daily allowance percentage. Formula: previous day's EOD balance × (applicable loss allowance percentage / 2) / 100. A 3% allowance gives a 1.5% limit: 1.5% of $100,000 previous-day EOD balance = $1,500. All open trades on the same instrument are summed, and exceeding the limit breaches the account. The limit is based on the allowance percentage, not 50% of the whole balance, the remaining buffer or a fixed original starting amount. Evaluations and challenges are exempt.
Opening a trade without a stop-loss does not itself trigger this open-loss rule. A stop-loss estimate is useful risk planning, but this control checks the combined current floating loss on the same instrument. Each instrument is checked separately; account-wide daily, trailing and maximum-loss rules still apply.
Example — Gold (XAUUSD)
For a funded account with a 3% applicable daily or trailing allowance, half of that percentage is 1.5%. With a $100,000 previous-day EOD balance, the open-loss limit per instrument is $1,500.
If three open XAUUSD trades have combined floating losses of $1,550, that exceeds the $1,500 instrument limit and breaches the account. If the next reference day's EOD balance is $110,000, the same 1.5% setting gives a $1,650 limit. The calculation uses yesterday's EOD balance, not the original starting balance or remaining drawdown buffer.
Best Practices
Calculate risk at entry, not after the trade closes
Use stop-losses to define and cap risk
When stacking positions on the same instrument, combine the risk and treat it as one trade idea
Monitor equity during open trades to ensure limits aren’t exceeded
If you’re unsure whether a setup complies with Funded2 rules, reach out to Funded2 support via funded2.com—we’re here to help you trade safely and consistently.
This public policy wording does not retroactively regrade trades or remove existing contractual rights. Ask support to confirm the terms applicable to an existing or legacy account.