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How the daily loss limit works, with the arithmetic

The rule that closes more accounts than any other, taken apart: where the reference comes from, why profit made today does not move it, and three days worked through in dollars.

Note
No. 02
Filed
3 Oct 2026
Subject
Rules · 6 min
Figures from
RS-2026.10-1

Most accounts that close at a prop firm close on the daily loss limit, and most of the traders who lose them thought they had more room than they did. The rule is short. The misunderstandings come from three details: what the limit is measured from, what it is measured on, and when it resets. This post goes through each, then works three days in dollars.

The rule in one sentence

Your equity may not fall more than 3% of your starting balance below where the account stood at 00:00 UTC. On a $100,000 account that is $3,000, and it is always $3,000: the amount is a percentage of the starting balance, not of today's balance, so the number you have to remember never changes.

Measured from: the higher of balance and equity at the reset

At 00:00:00 UTC the engine records two figures: your balance (closed profit and loss, fees and funding) and your equity (balance plus the open profit or loss of your positions at Bulk's mark price). The day's reference is the higher of the two. The floor for the day is that reference minus the daily amount.

Why the higher one? If we used balance alone, open profit carried overnight could be given back the next day without counting. If we used equity alone, someone carrying an open loss through midnight would get a fresh allowance on top of it. Taking the higher figure closes both gaps.

Measured on: equity, all day

The check runs on equity, on every price update. Open positions count the whole time. So do fees, charged at each fill, and funding, applied every hour. You do not need to close a losing trade for it to count against the limit.

What does not move the floor

Profit you make during the day. The reference is set at the reset and stays there until the next one. If you are up $3,000 by lunchtime, your floor is exactly where it was at midnight, which means you now have twice the room. This is the detail people most often get backwards: the daily limit is not a trailing stop on today's high.

Three days, in dollars

Day A: flat overnight ($100,000 account)

  1. 0100:00 UTC: balance $100,000, no position, equity $100,000
  2. 02Reference $100,000; floor $100,000 minus $3,000
  3. 03You may be down $3,000 at the worst moment of the day, open or closed

Day B: an open profit carried through the reset

  1. 0100:00 UTC: balance up 2% on the start, plus an open long showing 1.5% more
  2. 02Reference: the equity figure, because it is the higher one
  3. 03Floor: that equity minus $3,000
  4. 04If the long gives its open profit back, that counts as today's loss

Day C: an open loss carried through the reset

  1. 0100:00 UTC: balance $100,000, open position at minus 2.5%
  2. 02Reference: $100,000 (balance is the higher one)
  3. 03Floor: $100,000 minus $3,000
  4. 04The position already used 2.5% of it. Only the rest is left today

The exact figures for these cases, computed from the current ruleset, are on the Rules page under the daily loss limit.

The two limits together

There is a second floor: the max drawdown, fixed at 94% of the starting balance. It never moves. On any given day the floor that matters is the higher of the two, and your dashboard and the terminal's risk bar always show that one, in dollars.

What happens at the line

Touching the floor is a breach. The engine locks the account, records a snapshot of the equity, the floor, your positions and the prices used, cancels open orders and flattens positions at market. You get that report, and a 15% coupon for a new challenge valid for 7 days. If the breach rests on a wrong price or a platform fault, you have 7 days to appeal and we replay the account from recorded data.

Practical consequences

  • Size your stop against the dollars left today, not against the percentage on the ticket. The terminal shows "risk after this order" for exactly this reason.
  • Before the reset, look at what you are carrying. An open loss at 00:00 UTC is already part of tomorrow's allowance.
  • A good morning buys room, it does not raise the floor. You are allowed to use that room; you are not obliged to.
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