Daily Loss Limit
A daily loss limit is the maximum loss, expressed as a percentage of the account balance or equity, that a trader's account may incur within a single trading day before the evaluation or funded account is halted or terminated (hard breach) or trading is paused for the session (soft breach), depending on the firm's rules — measured against either the day's opening balance or the account's live equity including open position floating profit and loss.
The two measurement bases — balance-based (closed P&L only) and equity-based (including floating P&L) — produce materially different breach points. Equity-based daily loss limits are the more common and the more punishing: a position drawing down into the limit zone while still open triggers the breach, even if the trader plans to hold for recovery.
This page covers the mechanic; it is not trading advice.
Prop firm rules vary between firms and change frequently. Always verify specific rules directly with your firm before making any decision.
Why the daily limit catches more traders than the total floor
The maximum you can lose in one day. Most firms set this at 4% to 5% of the account size, and breaching it ends the challenge immediately, even if the breach happens on a single trade. On a $10,000 account with a 5% daily limit, a single $500 losing day ends the account.
The daily limit is a tighter constraint than the maximum drawdown for most realistic trading patterns. A trader who survives a 5-trade losing streak in a single day at 1% risk per trade is at the daily limit but still has buffer to the total drawdown. The day's trading must stop until the next session — most firms reset the daily counter at 17:00 New York time, but the cutoff varies by firm.
Hitting the daily limit on a single losing day
Account: $10,000. Daily loss limit: 5% = $500. Risk per trade: 1% = $100.
Maximum consecutive losing trades within one day before breach: $500 ÷ $100 = 5 trades. A 5-trade losing streak in a single day ends the challenge — even if the maximum drawdown buffer (10% = $1,000 total) is only half-consumed.
Equity-based measurement adds a second breach path. A single open position drawing down to -$500 in unrealised loss breaches the daily limit even if the trader holds the position open — the floating loss counts. Closing the position at -$450 to stay above the limit is a valid recovery; allowing the position to draw down to -$500 even momentarily is a breach.
Related terms
Common questions
When does the daily counter reset?
The reset time varies by firm. The most common cutoff is 17:00 New York time, which corresponds to the daily roll for forex pricing and the daily candle close on most charts. Some firms use 00:00 server time or 00:00 trader-local time. The firm's rules document specifies the cutoff — the trader must check directly with the firm and confirm before relying on a specific time.
If the daily limit is breached on Friday at 16:50 New York time, can the trader continue Monday?
No. A daily limit breach terminates the account regardless of the time within the day. The reset time defines when the day's loss counter starts over, not when a breach is forgiven. A breach is a breach — the account ends, and the trader must purchase a new evaluation to continue.