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What is the Maximum Daily Loss?

Understanding the Max Daily Loss, also known as the Max Daily Drawdown.

Lars avatar
Written by Lars
Updated over 3 months ago

How to Calculate Your Max Daily Loss

Every trader has a daily loss limit, also known as a daily drawdown. At 5pm EST each day, we calculate your daily loss limit by taking the higher value of your account balance or account equity and subtracting:

  • 4% from the initial capital for Flash Accounts.

  • 5% from the initial capital for Pro Accounts.

This gives you the maximum equity your account can lose for the next trading day.


Example 1 (Pro Account):

  • Initial Account Balance: $100,000

  • Open Trade with Floating Profit: $5,000

  • Account Equity at 5pm EST: $105,000

  • Daily Drawdown Limit: Your equity cannot drop below $100,000 ($105,000 - $5,000).


Example 2 (Pro Account):

  • Initial Account Balance: $100,000

  • Open Trade with Floating Loss: $1,000

  • Account Equity at 5pm EST: $99,000

  • Daily Drawdown Limit: Calculated based on your balance of $100,000, so your equity cannot drop below $95,000 ($100,000 - $5,000).


Example 3 (Pro Account):

  • Initial account Balance: $100,000

  • No Open Trades at 5pm EST: The daily drawdown is 5% ($5000) of your closed balance.

  • Account balance and equity at 5pm EST: $105,000

  • Daily Drawdown Limit: Calculated based on your balance of $105,000, so your equity cannot drop below $100,000 ($105,000 - $5,000).


Example 1 (Flash Account):

  • Initial Account Balance: $100,000

  • Open Trade with Floating Profit: $4,000

  • Account Equity at 5pm EST: $104,000

  • Daily Drawdown Limit: Your equity cannot drop below $100,000 ($104,000 - $4,000).


Example 2 (Flash Account):

  • Initial Account Balance: $100,000

  • Open Trade with Floating Loss: $1,000

  • Account Equity at 5pm EST: $99,000

  • Daily Drawdown Limit: Calculated based on your balance of $100,000, so your equity cannot drop below $96,000 ($100,000 - $4,000).


Example 3 (Flash Account):

  • Initial account Balance: $100,000

  • No Open Trades at 5pm EST: The daily drawdown is 4% ($4000) of your closed balance.

  • Account balance and equity at 5pm EST: $105,000

  • Daily Drawdown Limit: Calculated based on your balance of $105,000, so your equity cannot drop below $101,000 ($105,000 - $4,000).


Important Notes:

  • The daily loss limit includes commissions and swaps.

  • Exceeding your daily loss limit will result in account closure and forfeiture of any gains.

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