What Is a Daily Loss Limit?

A daily loss limit is the most an account is allowed to lose in a single trading day. In prop firm challenges, breaching it usually ends the account immediately; on some programs it pauses trading until the next day.

How it is calculated

Rules vary. Some firms use a percentage of the initial balance (for example 5%), others use the previous day's closing balance or equity, and many include open floating losses. The limit resets at a time set by the firm, not your local midnight.

Example

On a $100,000 account with a 5% daily limit, you can lose up to $5,000 in a day. Risking 1% per trade, five losses in a row would reach that limit.

How to stay inside it

• Set a personal daily stop well inside the firm's limit
• Risk 0.5% to 1% per trade
• Stop trading after two or three consecutive losses

Related: drawdown, trailing drawdown, FTMO journal. Plan your risk with the prop firm challenge calculator. See the trading glossary.