Daily Loss Limit
A daily loss limit is the maximum loss a trader's evaluation or funded account may incur within a single trading day, set by the firm as a fixed amount or as a percentage of the initial or start-of-day balance or equity; depending on the firm's rules, reaching or crossing it either ends the account (hard breach) or closes open positions and pauses trading for the rest of the session (soft breach).
Firms set the level the day's loss counts from (the day's opening balance, its opening equity, or the higher of the two), and their rules state whether floating profit and loss on open positions counts toward the limit. A limit counted from the opening balance can still include floating losses, as it does when the firm tests live equity against that balance. Where floating losses count, 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 often binds before the total floor
The maximum you can lose in one day. The size varies by firm and is commonly stated as a percentage of the account. What a breach does also varies: at some firms it ends the challenge, even if the breach happens on a single trade; at others it closes open positions and stops trading until the next session, and the account survives. On a $10,000 account with an illustrative 5% daily limit set on the initial balance, a loss-making day that takes equity $500 below the day's starting balance reaches the limit.
The daily limit is often a tighter constraint than the maximum drawdown. A trader who takes five $100 losses in a single day at 1% risk per trade has reached the daily limit but still has buffer to the total drawdown. Whether that fifth loss is a breach depends on the firm's trigger: some firms count reaching the limit, others only falling below it. Once the limit is breached, trading stops until the next session at a soft-breach firm, and the account ends at a hard-breach firm. Each firm sets the time its daily counter resets.
Hitting the daily limit on a single losing day
Account: $10,000. Daily loss limit (illustrative, set on the initial balance): 5% = $500. Risk per trade: 1% = $100.
Loss-making trades of $100 that fit inside the $500 limit: $500 ÷ $100 = 5. The fifth consecutive loss takes the day to the limit itself: where the firm's rule triggers when the loss reaches the limit, that fifth loss is the breach; where it triggers only when equity falls below the limit, the fifth loss is the breach only if commission or swap charged that day takes equity past the limit; with no costs, equity sits exactly at the limit and the next loss breaches it. On a hard-breach rule that ends the challenge, even though an illustrative 10% maximum drawdown ($1,000 in total) is only half used.
Equity-based measurement adds a second breach path. A single open position drawing down to -$500 in unrealised loss reaches the daily limit even if the trader holds the position open — the floating loss counts. Closing the position at -$450 realises that loss without a breach, leaving $50 of the day's limit before costs; allowing the position to draw down to -$500 even momentarily reaches the limit, which is a breach wherever reaching the limit counts.
Related terms
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Common questions
When does the daily counter reset?
The reset time varies by firm, and so does its timezone. Firm rule pages show midnight Central European time (CET or CEST), midnight server time, and the start of the next US futures session at 18:00 New York time. The firm's rules document specifies the cutoff.
If the daily limit is breached on Friday at 16:50 New York time, can the trader continue Monday?
It depends on the firm. The reset time defines when the day's loss counter starts over, not when a breach is forgiven. Where a breach ends the account, a new evaluation or a paid reset is needed to continue; where it only stops trading until the next session, the account continues on Monday.