Daily Loss Limit

Daily loss limit is a per-session loss cap that resets at the start of each new trading day. Breach it and the account is either paused until the next session or terminated outright, depending on the firm.

Daily limits are usually expressed as a fixed dollar amount (e.g. $1,000 on a $50k account) or a percentage of the starting balance (commonly 3–5%). They sit on top of the maximum drawdown rule and bind whichever triggers first.

Two implementation details matter most. First, calculation timing: some firms check the limit in real time against intraday equity (including unrealized PnL on open positions), while others check only against end-of-day closing equity. Real-time checks force traders to manage open-position risk continuously. Second, day-boundary timing: some firms define "day" as the futures session (e.g. 5pm CT to 4pm CT), others as midnight UTC. The boundary determines when the limit resets and when overnight positions are evaluated.

A trader on a 5% real-time daily limit cannot run a 4% drawdown intraday hoping to recover by close — the limit triggers the moment unrealized losses cross the line.