Understanding Max Daily Loss
The Max Daily Loss is the maximum amount a trader can lose in a single trading day before breaching the challenge rules. It is calculated as a fixed percentage of the previous day’s End of Day Balance and adjusts as the balance changes.
The trading day runs from 17:00 EST to 17:00 EST (00:00 to 00:00 server time).
As the End of Day Balance increases, the Max Daily Loss Limit also increases.
If the account balance decreases, the Max Daily Loss is recalculated downward accordingly.
Example: 5% Max Daily Loss Limit
Let’s break it down over three days with different account balances.
Day 1: Challenge Begins
Starting Balance: $50,000
Max Daily Loss: 5% of $50,000 = $2,500
Minimum Equity Before Breach: $50,000 – $2,500 = $47,500
✅ If the account equity drops below $47,500 in a single day, the challenge is failed.
Day 2: Balance Decreases
End of Day Balance: $48,500
Max Daily Loss: 5% of $48,500 = $2,425
Minimum Equity Before Breach: $48,500 – $2,425 = $46,075
❌ A lower balance results in a lower Max Daily Loss Limit. If the account equity drops below $46,075, the challenge is failed.
Day 3: Balance Increases
End of Day Balance: $55,000
Max Daily Loss: 5% of $55,000 = $2,750
Minimum Equity Before Breach: $55,000 – $2,750 = $52,250
✅ Since the balance increased, the Max Daily Loss Limit also increased. If the account equity falls below $52,250, the challenge is failed.