Drawdown rules explained

Daily loss limit

The daily loss limit caps how much you can lose in one trading day, usually 3–5% of the initial account size. On a $100,000 account with a 5% limit, that is $5,000 per day.

Many firms measure it from your balance at the daily reset. If you start the day at $103,000, your breach level that day is $98,000. Check which time zone the reset uses.

Static vs trailing maximum loss

A static maximum loss is fixed below your starting balance: on a $100,000 account with a 10% static limit, the floor is always $90,000, however much profit you make.

A trailing maximum loss follows your highest balance or equity. With a 10% trailing limit, if your account peaks at $106,000, the floor moves up to $96,000. Trailing rules shrink your room as you profit, so they need extra care.

Balance-based vs equity-based

Balance-based rules count closed trades only. Equity-based rules include open positions, so a trade that is temporarily deep in loss can breach the limit even if it later recovers. Most firms measure loss limits on equity — assume they do unless the rules say otherwise.