2-Step Plus Daily Drawdown Rule
The Daily Drawdown limits how much an account can lose within a single trading day. This rule is designed to protect the account from excessive short term losses and applies during Phase 1, Phase 2, and the Funded stage.
Daily Drawdown Limit
Phase | Daily Drawdown |
Phase 1 | 4% |
Phase 2 | 4% |
Funded | 4% |
The daily drawdown is calculated using the previous day’s highest balance or equity.
How Daily Drawdown Is Calculated
At the start of each trading day, the system records the highest balance or equity from the previous trading day
The daily drawdown limit is set at 4% below that level
Both balance and equity are monitored
Open trades are included in the calculation
If balance or equity reaches the daily drawdown limit at any point, the account is breached.
Daily Reset Behavior
The daily drawdown resets every trading day
The new reference level is always the previous day’s highest balance or equity
Profitable days raise the next day’s drawdown threshold
Losing days lower the next day’s allowable loss range
Example
A trader finishes Day 1 with:
Highest balance or equity: $50,000
Day 2 daily drawdown limit
4% of $50,000 = $2,000
Breach level = $48,000
If balance or equity touches $48,000 at any moment during Day 2, the account is breached, even if it later recovers.
If Day 2 ends with a new high of $52,000:
Day 3 drawdown is calculated from $52,000
New breach level = $49,920
Important Notes
Daily drawdown is based on intraday movement, not daily close
Floating losses count toward daily drawdown
Recovering above the limit does not undo a breach
Daily drawdown applies independently from max drawdown