Daily Loss Limit

The maximum amount you can lose in a single trading day before the account is breached or frozen.

The daily loss limit (also called "daily drawdown" or "max daily loss") restricts how much of your account balance you can lose within a single calendar day.

Typical Limits

Most prop firms set daily loss limits between 2-5% of the initial account balance. For a $100K account:

2% limit = $2,000 max daily loss
5% limit = $5,000 max daily loss

Important Details

Reset Time: Daily limits typically reset at 5:00 PM ET (end of futures trading day) or midnight UTC. Check your firm's specific reset time.
Open Trades: Most firms include unrealized (open) P&L when calculating daily loss. A floating loss counts even if you haven't closed the trade.
Commissions: Trading commissions usually count toward your daily loss.

Protection Strategy

Set a personal daily loss limit that's 50-75% of the firm's actual limit. This gives you a buffer against slippage and unexpected market moves.

Related Terms

Consistency Rule

A requirement that no single trading day accounts for more than a set percentage of total profits.

Drawdown

The maximum allowed decline from peak equity in a trading account.

Trailing Drawdown

A drawdown limit that moves up as your account reaches new highs, but never moves back down.

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