Daily Loss Limit

Definition: The daily loss limit (also called maximum daily drawdown or daily loss cap) is the maximum loss a prop firm account is allowed to sustain in a single trading day. If the account's closed P&L plus floating exposure reaches this threshold at any point during the day, trading is suspended and the account is typically terminated.

How It Is Calculated

The daily loss limit is almost always calculated on both closed and open (floating) positions simultaneously. A trader with $2,000 in closed losses and a $3,500 floating loss on an open position has $5,500 of total exposure — even though only $2,000 is realized.

The day resets at midnight in the broker's timezone, typically Central European Time (CET/CEST).

Daily Loss Limits Across Major Prop Firms

FTMO (2-Step): 5% — balance-based, static
FTMO (1-Step): 3% — balance-based, trailing end-of-day
The5ers: 4% — equity-based
FundedNext: 5% — balance-based
E8 Funding: 5% — equity-based
FundingPips: 5% — balance-based

Always verify current rules directly with your prop firm.

How TradeBrake Enforces It

TradeBrake checks closed P&L plus current floating exposure before every order. If placing the order would bring total exposure within the configured safety buffer of the daily limit, the order is blocked. When the limit is reached, all positions are closed and the account is locked automatically. This works across all supported trading platforms.

Related Terms

• Max Drawdown
• Revenge Trading
• Prop Firm Challenge