Daily Drawdown Limit
The maximum loss your account can incur in a single 24-hour cycle before automatic breach.
Applies to 3 firms • Risk Management
Next: Trailing Drawdown vs Static DrawdownDeep Dive
Why this rule exists
Daily drawdown protects prop firms from intraday blowout events. Depending on the firm, it is calculated against either your daily starting balance, current floating equity, or the highest equity peak of the day.
How traders get caught
Risk floors are enforced tick by tick against live equity including spread and swaps. Server-time resets and intraday peaks shrink usable room far below what the headline percent suggests.
How to stay safe
Check the Source Inspector for the exact FAQ excerpt, test your equity distance in the simulator, and keep a 20% buffer above the nearest floor.
The Formula
How it is calculated
Real Dollar Example
On a $100,000 account with 4% daily loss starting at $100,000, your daily floor is $96,000. If your equity touches $95,999 at any millisecond, the account is terminated.
Common Traps & Mistakes
Assuming trailing drawdown resets at local midnight instead of the firm server time (e.g. 00:00 CE(S)T).
Holding winning positions without taking partials, watching floating profit vanish and violating the intraday drawdown floor.
Holding multiple open trades through high-spread rollover hour (21:00-22:00 UTC) where spread widening trips the floor.
Firms using this rule
Rule FAQ
Frequently Asked Questions: Daily Drawdown Limit
What is the Daily Drawdown Limit?
The maximum loss your account can incur in a single 24-hour cycle before automatic breach.
How is Daily Drawdown Limit calculated across prop firms?
Daily Loss Floor = Higher of (Day Start Balance, Day Start Equity) - (Nominal Size * Daily Limit %)
What are the most common mistakes traders make with Daily Drawdown Limit?
Assuming trailing drawdown resets at local midnight instead of the firm server time (e.g. 00:00 CE(S)T). Holding winning positions without taking partials, watching floating profit vanish and violating the intraday drawdown floor. Holding multiple open trades through high-spread rollover hour (21:00-22:00 UTC) where spread widening trips the floor.
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