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What is a daily loss limit?

A daily loss limit caps how much an account may lose in one trading day, counted from that day's start. It runs alongside the max loss, which covers the account's whole life. At some firms hitting it ends your day and the account trades again tomorrow; at others it fails the account.

Worked example

Sample account · $50,000, $2,000 trailing max loss, $1,000 daily loss limit

Two limits run at once: the max loss over the account's life, and the daily limit counted from this morning.

  1. Morning, down $650

    Balance
    $49,350
    Highest close
    $50,000
    Floor
    $48,000
    Room
    $1,350
    Left today
    $350

  2. Afternoon, down $1,000

    Balance
    $49,000
    Highest close
    $50,000
    Floor
    $48,000
    Room
    $1,000
    Left today
    $0

    The daily limit is reached while the max loss still has room.

Down $650, the account has $350 left today and $1,350 above its floor: the daily limit is the nearer line. Down $1,000, the daily limit is hit with $1,000 still above the floor.

Computed by the same rule engine your real accounts use.

The nearer line

Early in an account's life the daily limit is usually closer than the max-loss floor; later, after a drawdown, the floor can be closer. The line that matters on a given day is whichever has less room. For your own money you can set a daily limit yourself and hold to it the same way.

How firms differ

  • Whether there is one at all, and whether it's a fixed amount or switched on per account.
  • What hitting it does: ends the trading day, or fails the account.
  • Whether it counts realized losses only, or open losses too, and when the day resets.

Check your firm's current terms. Claridae's presets record each firm's version, dated, and you can edit any account's rules.

See it on a sample day

The live demo runs a sample trading day through the Desk, no sign-up.

Open the live demo

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