The Daily Loss Limit is the maximum your account is allowed to drawdown on any given day before breaching your account. You can think of it as the “daily account stop-loss”.
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The initial level is set at 5% from the starting balance of your account for all our evaluation programs. It means that at any moment during the trading day the decrease in open or closed trades should not exceed this predetermined limit.
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The Daily Loss Limit on the account is re-calculated at the end of every trading day based on 5% of the account’s balance or equity, whichever is greater when the trading day changes at 5pm EST.
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The good news is, because we base the Daily Loss Limit on a %, and not a fixed $ amount, the more money you make in your account the wider your daily stop-loss is! For example, if you start with a $100,000 balance and grow that account to $120,000 (balance or equity), your daily stop-loss level is now $6,000 vs. $5,000.
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The Daily Loss Limit and Max Drawdown rules serve as important risk management measures, ensuring that traders control their equity fluctuations within a specified range. By adhering to these rules, traders can protect their simulated capital and maintain a disciplined approach to managing their account!