Daily Loss Limit
Also known as: daily loss cap, daily drawdown limit, max daily loss, daily stop-out
What is it?
A daily loss limit is the maximum a prop-firm account may lose within a single trading day before the firm closes it - a hard floor that resets at the firm's daily rollover, separate from the account's overall drawdown. Two details decide whether you breach it. The first is what it measures: most firms track equity rather than closed balance, so an open position sitting $600 underwater already counts against the limit even though you have not realised the loss.
A session that breaches the $5,000 daily limit
$100,000 account, 5% daily loss limit:
- Trade 1: -$1,500 - $3,500 of headroom left
- Trade 2: -$1,400 - $2,100 left
- Trade 3: -$1,400 - $700 left
- Trade 4 is opened risking $900
Equity touches the $5,000 floor and the account is closed before trade 4's stop is ever reached.
The same session, sized against the headroom
$100,000 account, personal stop set at 60% of the limit:
- Trade 1: -$1,500 - $3,500 of headroom left
- Trade 2: -$1,400 - $2,100 left
- Personal stop of $3,000 is reached, so trading ends
- Trades 3 and 4 are never taken
The day closes $2,100 above the floor and the account is still open tomorrow.
The second is what it is measured from - some firms compute the day's floor from the balance at rollover, others from the higher of balance or equity, which quietly removes room whenever you begin the day holding a floating winner. On a $100,000 account with a 5% daily limit, the floor sits $5,000 below the day's starting point. Three trades risking 1% each cannot breach it; the same three plus a fourth revenge trade at 2% can.
The daily limit is the single most common cause of failed evaluations, and almost always for the same reason: the individual losses were sized correctly and the number of them was not.
Why it matters: The daily loss limit ends an account after one bad session regardless of how profitable the month was, and most firms measure it on equity including open trades.
Daily floor = Day's starting equity x (1 - daily loss limit %); a breach occurs when equity touches that floor
One session of oversized or repeated losses closes the account outright, which makes the daily limit a constraint on trade count as much as on trade size.
Real-world example
A $100,000 account with a 5% daily limit is down $4,300 after three trades. A fourth trade risking $900 would touch the $5,000 floor and close the account before its stop is ever hit.
How SignalBots handles it
SignalBots states each signal's stop distance in advance, so you can add up the risk of the trades already taken and see whether the next one still fits inside the day's remaining headroom. See /risk-warning.
Pro tip
Set a personal daily stop at roughly 60% of the firm's limit and close the platform when it is reached - the last 40% is what a breach is made of.
Common pitfalls
Counting only closed losses against the limit while a floating loss on an open position has already carried the account past the equity floor.
Frequently asked questions
When does the daily loss limit reset?
At the firm's stated rollover, usually 00:00 server time rather than your local midnight. Trades held across that rollover carry their floating loss into the new day's calculation at most firms.
Does the daily limit use balance or equity?
Most firms use equity, so unrealised losses count in real time. A few use closed balance only. It is worth confirming in the rulebook, because it changes when a breach happens by hours.
What happens the moment I breach it?
The platform typically closes open positions and disables trading immediately. On an evaluation the attempt fails; on a funded account the account is normally terminated outright.
Is the daily loss limit the same as maximum drawdown?
No. The daily limit resets every day and governs one session. Maximum drawdown is cumulative across the life of the account and never resets, so both have to be respected at once.
Does a losing day count if I end it in profit?
The limit is measured against the intraday low in equity, not the closing figure. Dipping past the floor breaches the account even if it recovers to green before the day ends.
Trading involves substantial risk of loss. Historical and backtested results do not guarantee future performance. Read the full risk warning.
