Daily drawdown

A daily drawdown (also called a daily loss limit) is a risk rule that caps how far your account can fall within one trading day. If your balance or equity drops below the daily limit, the account is breached and either fails the evaluation or is closed if it was funded.

The limit is usually anchored to your start-of-day balance or sometimes your peak equity for the day. For example, on a $50,000 account with a $1,100 daily drawdown, if you start the day at $51,000 you must not let equity fall below $49,900 at any point that day. Crucially, many firms measure this on intraday equity, meaning an open position sitting at a large unrealised loss can breach you even if you never close it.

Daily drawdown resets at the start of each new trading day, which makes it different from a maximum drawdown that persists across the life of the account. Beginners most often blow accounts by ignoring the intraday equity rule and holding a losing trade through the limit.