Prop firm daily loss limit: how it is calculated, with examples

Most prop firm accounts are not lost to a bad strategy. They are lost on one bad day. The daily loss limit is the rule behind that, and it is easy to misread: two firms can both say "5% daily loss" and mean different numbers.

This guide explains the parts every daily loss rule is built from, shows the math with worked examples, and summarises how five well-known firms define it. Rules change often, so treat the firm table as a starting point and confirm on your firm's own rules page and dashboard.

The four questions behind every daily loss rule

Every daily loss limit answers four questions. Once you know your firm's answer to each, you can calculate your exact limit for the day.

1. How big is the allowance? A percentage, for example 3%, 4% or 5%.
2. A percentage of what? Either your initial account size (a fixed dollar amount every day) or a moving reference such as yesterday's closing balance.
3. What is measured against it? Usually equity: closed results plus the floating profit or loss of open trades, including commission and swap. Some firms measure only closed balance.
4. When does the day start? Midnight in a specific time zone, the broker server's midnight, or a fixed time such as 5 PM New York time.

Type 1: a fixed amount from the initial balance

Some firms calculate the dollar allowance once, from the initial account size, and subtract it from the balance at the start of each day.

Daily floor = balance at the start of the day − (limit % × initial account size)

FTMO describes its rule this way: the limit is the account balance at midnight CE(S)T minus 5% of the initial capital for the 2-Step Challenge (3% for the 1-Step), and equity must not drop below it at any time.

Worked example on a $100,000 account with a 5% rule (an illustration, not real account data):

Day	Balance at start of day	Allowance (5% of $100,000)	Daily floor
1	$100,000	$5,000	$95,000
2 (after a +$2,000 day)	$102,000	$5,000	$97,000
3 (after a −$3,000 day)	$99,000	$5,000	$94,000

The allowance stays at $5,000. Only the floor moves with your starting balance.

Type 2: a percentage of a moving reference

Other firms take the percentage of a reference that changes every day, such as yesterday's closing balance, or the higher of yesterday's balance and equity.

Daily floor = reference × (1 − limit %)

The5ers' 2-Step plan, for example, describes its limit as 3% of the previous day's closing balance or equity, whichever is higher.

Worked example with a 3% rule, where the reference is the higher of balance and equity at the previous day's close:

• Balance at close: $100,000
• An open trade is up $1,000, so equity at close: $101,000
• Reference = $101,000 (the higher one)
• Allowance = 3% × $101,000 = $3,030
• Daily floor = $101,000 − $3,030 = $97,970

Notice what this means: an open profit can raise tomorrow's floor. If that trade then turns into a loss, you start the day with less room than the balance alone suggests.

Why open trades and costs matter

When a firm measures equity, your floating losses count before you close anything. Commission and swap count too.

Worked example with a $95,000 floor:

• You close three trades for −$3,000. Balance: $97,000.
• One trade is still open with a floating loss of −$2,100.
• Equity = $97,000 − $2,100 = $94,900, which is below $95,000.

The account breaches although the closed balance is $2,000 above the floor. If you only look at closed trades, you will think you have room you do not have.

Costs work the same way. On a busy day, commission alone can be a meaningful part of the allowance; see gross vs net P&L for how to measure your cost per trade.

Reset times are not all midnight where you live

The "day" ends at a time the firm chooses, and it is often not your local midnight:

• FTMO: midnight CE(S)T. FTMO also notes that your trading platform's server clock may not match CE(S)T.
• FundedNext (CFD): midnight server time, which FundedNext gives as GMT+3 during daylight saving time and GMT+2 otherwise.
• FXIFY: FXIFY's guides describe the reference as the prior day's closing balance at 5 PM New York time (EST).

Two practical consequences:

1. A trade you open "late in the evening" may fall into the next day's limit, or the previous one's.
2. A position held across the reset carries its floating loss into the new day. FTMO warns that a position within the limit before midnight can exceed it after the reset.

Hard limit or a pause?

Not every daily limit ends the account. Some firms treat reaching it as a breach; others pause trading until the next day. E8 Markets, for example, documents a "Daily Pause" variant that stops trading for the day without failing the account. FundedNext describes a soft breach on some futures accounts but a breach on its CFD accounts. Check which one applies to your exact program, because it changes how much a bad day costs you.

How five firms define it

What each firm's own rules pages said when we checked them on 14 October 2026. Each firm offers several programs, and the details differ between them; this table shows the main structure only. Always confirm on your firm's current rules page and dashboard before you trade.

Firm (program)	Allowance	Reference	Measured on	Day resets
FTMO (2-Step / 1-Step)	5% / 3% of initial capital	Balance at the start of the day	Equity, incl. open trades, commission and swap	Midnight CE(S)T
FundedNext (Stellar 2-Step / Lite / Instant)	5% / 4% of initial balance / none	Initial balance	Includes floating P&L, swap and commission	Midnight server time (GMT+2/+3)
The5ers (2-Step)	3%	Previous day's closing balance or equity, whichever is higher	—	—
E8 Markets	Fixed dollar amount from the initial balance; % depends on the plan	Balance at the start of the day	—	00:00 server time
FXIFY	% depends on the program	Prior day's closing balance	Equity, incl. open trades	5 PM EST

A dash means the page we read did not state it clearly. Some firms' own pages also disagree with each other on details. Where that happened, we left the detail out instead of guessing.

Know your number before the first trade

You can do this in two minutes each morning, by hand or with our free prop firm calculator:

1. Write down today's floor using your firm's formula and today's starting balance.
2. Subtract your open risk. If you already hold positions, their stop-loss distance counts against the same allowance.
3. Divide the room left by your risk per trade. With $5,000 of room and $1,000 risk per trade, five losing trades in a row reach the limit; with open trades and costs, fewer.
4. Set your own stop before the firm's. Many traders stop for the day well before the firm's floor, so that slippage, a gap or a trade they forgot to close cannot take the account.
5. Check the clock. Know the reset time in your own time zone, especially around daylight-saving changes.

Key points

• Know four things: the percentage, what it is a percentage of, what is measured (balance or equity), and when the day resets.
• A fixed allowance from the initial balance and a percentage of a moving reference give different floors.
• When equity is measured, open losses, commission and swap count before you close anything.
• Reset times vary by firm and are often not your local midnight.
• Rules change. Check your firm's current rules page; this guide was last checked on the date shown below.

Where TradeYar fits: when you create an account, you can pick your firm's rules from 20 configured firms. After each closed trade, TradeYar shows how far you are from the daily and overall loss limits. It works from closed trades only, so it cannot see open positions or floating equity. Use it to review your days and spot the patterns before a bad one, not as a live risk monitor.