Glossary
What Is a Daily Loss Limit in Trading
The maximum loss per day under prop rules — measured from the starting balance or the day's opening balance. The consequence depends on the firm: at FTMO a breach fails the evaluation, at Topstep it only halts trading for the rest of the day.
How it works
A personal daily loss limit is one a trader sets for themselves, usually around 2–3 times the risk taken on a single trade (for example, at 1% risk per trade, a 2–3% daily cap), so that one bad streak doesn't spiral into an uncontrolled attempt to win it all back in the same session.
At prop firms, the daily limit is part of the official evaluation rules, and different firms calculate it differently. On FTMO's 2-Step program, the daily loss limit is 5% of the starting balance, while on the 1-Step program it's 3% of the starting balance; these figures come from the firm's rules and don't necessarily match a trader's personal risk limit.
The daily limit and overall drawdown are separate constraints: the daily limit resets every new trading day, while overall drawdown accumulates across the whole evaluation period. Breaching the daily limit fails the evaluation at most CFD-based prop firms just as much as breaching overall drawdown does, but the two are calculated differently.
Example
Starting balance on FTMO's 2-Step is $100,000. The daily loss limit at 5% is $5,000. If the combined loss from closed and open positions reaches $5,000 in a single trading day, continuing to trade that day breaches the program's rules.
Common mistake
A common mistake is confusing a personal daily risk limit with a prop firm's limit and setting it too close to the firm's actual rule, leaving no buffer for slippage or open positions at the moment of calculation.
Read next
Related terms
Frequently asked questions
- Is FTMO's daily limit the same across all programs?
- No: it's 5% of starting balance on the 2-Step program and 3% on the 1-Step program; always check a specific firm's current rules before relying on any figure.
- Does the daily loss count only closed trades?
- At most prop firms, floating losses on open positions at the time of the check count too, not just the results of already-closed trades.
What's left of the daily limit — as the day goes
Give an account a daily limit and the Trading OS journal shows how much more you can lose today, from your closed trades.
No sign-up — the journal runs in your browser; an account is only needed for sync.