What is the daily drawdown rule in prop firm trading?
The daily drawdown rule caps the maximum amount a trader can lose in a single trading day. Most firms set this between 4–5% of the account balance. Breaching this limit results in immediate account termination, regardless of overall account health.
What is the daily drawdown rule in prop firm trading?
The daily drawdown rule caps the maximum amount a trader can lose in a single trading day. Most firms set this between 4–5% of the account balance. Breaching this limit results in immediate account termination, regardless of overall account health.
Key Points
- Typically 4–5% of starting daily balance or equity
- Resets at midnight server time (usually New York)
- Includes floating/unrealised losses in most firms
- Breaching this rule terminates the account immediately
- Applies during both challenge and funded phases
Firm Comparison
| Firm | Policy | Threshold | Consequence |
|---|---|---|---|
| FTMO | Daily Drawdown | 5% of starting balance | Immediate account breach |
| FXIFY | Daily Loss Limit | 4% of account balance | Account terminated |
| FundingPips | Daily Drawdown | 5% of account balance | Account closed |
| BrightFunded | Daily Loss | 4% of balance | Challenge/funded breach |
| The5ers | Daily Drawdown | 4% trailing | Account terminated |
| E8 Markets | Daily Drawdown | 4% of balance | Account breach |
| FundedNext | Daily Loss | 5% of balance | Immediate termination |
| Think Capital | Daily Drawdown | 5% of balance | Account closed |
Frequently Asked Questions
What is the daily drawdown rule in prop trading?
It caps how much you can lose in a single trading day, typically 4–5% of your account balance, including floating losses.
Does daily drawdown reset every day?
Yes, it resets at midnight server time (usually New York time) each trading day.
Does floating P&L count toward daily drawdown?
In most firms, yes — unrealised losses count toward your daily drawdown limit.
What happens if I breach the daily drawdown?
Your account is immediately terminated and you cannot continue trading.