What is the daily loss limit?
The Daily Loss Limit is the maximum amount your account may lose in a single trading day. This limit resets each day at 5:00 PM EST.
The Daily Loss Limit is calculated using the greater of the previous day’s end of day balance, which includes closed profit and loss only, or the previous day’s end of day equity, which includes both balance and any open profit or loss.
This ensures that unrealised gains are taken into account when determining the allowable loss for the next trading day.
If a trader finishes the day with open positions in profit, equity will be higher than balance and will be used to calculate the Daily Loss Limit.
If a trader finishes the day with no open positions, balance and equity will be the same.
If a trader finishes the day with open positions in a loss, equity will be lower than balance, and the balance will be used.
Example:
A trader has a $100,000 account with a 5 percent Daily Loss Limit.
At the 5:00 PM EST reset, the account balance is $100,000 and open positions are in profit, resulting in account equity of $102,000.
Because equity is higher, the Daily Loss Limit is calculated using $102,000.
Five percent of $102,000 equals $5,100.
The account will violate the Daily Loss Limit if equity reaches $96,900 at any point during the next trading day.
If there were no open positions, the Daily Loss Limit would be based on $100,000, meaning a breach level of $95,000.
The Daily Loss Limit is calculated using the greater of the previous day’s end of day balance, which includes closed profit and loss only, or the previous day’s end of day equity, which includes both balance and any open profit or loss.
This ensures that unrealised gains are taken into account when determining the allowable loss for the next trading day.
If a trader finishes the day with open positions in profit, equity will be higher than balance and will be used to calculate the Daily Loss Limit.
If a trader finishes the day with no open positions, balance and equity will be the same.
If a trader finishes the day with open positions in a loss, equity will be lower than balance, and the balance will be used.
Example:
A trader has a $100,000 account with a 5 percent Daily Loss Limit.
At the 5:00 PM EST reset, the account balance is $100,000 and open positions are in profit, resulting in account equity of $102,000.
Because equity is higher, the Daily Loss Limit is calculated using $102,000.
Five percent of $102,000 equals $5,100.
The account will violate the Daily Loss Limit if equity reaches $96,900 at any point during the next trading day.
If there were no open positions, the Daily Loss Limit would be based on $100,000, meaning a breach level of $95,000.