Glossary
Daily loss limit
A daily loss limit is the most an account may lose in a single trading day before it breaches.
What it means
Most prop firms pair a daily loss limit with a maximum drawdown. The daily limit stops one bad session from taking the whole account. The maximum drawdown caps losses over the life of the account.
Firms reset the daily limit at a fixed time, often midnight on their server clock, and measure it from a reference point: the balance at the start of the day, or the higher of balance and equity at that moment. Losses on open trades usually count.
Some firms treat a daily loss breach as a failed account. Others pause trading until the next reset. The rule, the reset time and the reference point should all be shown on the trader's dashboard.
Worked example
A $100,000 account has a 5% daily loss limit, or $5,000, based on the starting account size. The trader starts the day with a balance of $102,000. The account breaches if equity falls to $97,000 at any point that day, including losses on trades still open.
Free tools that use this
- Trade plannerThe trade planner sizes a trade from your risk and stop, then shows what it could win and what a loss would leave of today's room before your...
- Drawdown calculatorThis prop firm drawdown calculator shows the lowest your equity can go today before it breaks a rule, and how much room you have left. In words:...
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