The Maximum Daily Loss is the maximum amount a trader can lose within a single trading day. For this rule, the higher value between equity and balance will be used to calculate the limit. The Maximum Daily Loss is set at 4% of the initial equity or balance at the start of the day.
This means that the equity for the day, which includes the sum of currently floating PnL (Profit and Loss) and all closed positions for that day, must not breach the Maximum Daily Loss Limit. This limit is reset daily at 00:00 CE(S)T/server time.
Here are examples of how the rule is applied:
At the start of day 3, your account balance is $105,000, and your equity is $107,000. The Daily Loss Limit is 4% of the equity because it is higher:
Daily loss = $107,000 * 4% = $4,280 Daily Loss Limit.
This means your equity can’t go below $107,000 – $4,280. Daily Loss Limit = $102,720 on day 3.
If your equity goes below $102,720 at any moment on day 3, your account will be closed.
At the start of day 4, your account balance is $100,000, and your equity is $99,000. The Daily Loss Limit is 4% of the balance because it is higher:
Daily loss = $100,000 * 4% = $4,000 Daily Loss Limit.
This means your equity can’t go lower than $100,000 – $4,000. Daily Loss Limit = $96,000 on day 4.
If your equity goes below $96,000 at any moment on day 4, your account will be closed.
