Glossary · Prop-firm trading
Maximum daily loss
The most an account may lose in one of the firm's days, floating positions included, before the evaluation or the funded account ends.
Commonly 3% to 5% of the initial account size. The day is the firm's day, not yours: it begins at the firm's reset time, in the firm's time zone, and the limit is measured from where the account stood then - at some firms the balance, at some the higher of balance and equity.
At most firms that publish the rule it is measured on equity, so an open position that is under water counts against it before it is closed. In the moment, what matters is not the limit but what is left of it right now.
Worked example
A 100,000 account with a 5% daily limit may not fall below 95,000 today, measured from where it stood at the firm's reset. At 96,200 equity with a position 800 under water, the room left is 1,200, not 2,000: the floating loss already counts. Two more 500 losses fit; a third lands on the line.
- Also called
- daily drawdown, daily loss limit, max daily loss
- Not to be confused with
- Maximum loss, which is measured over the whole account rather than one day
- Words this product avoids for it
- margin; headroom (for what is left of it; in Propcockpit that is the Buffer)