How the daily loss limit works, with examples

The daily loss limit caps how much your account can lose in a single trading day. On the 2-Step Challenge it's 5%; on the 1-Step Challenge it's 3%. It's the rule that ends the most challenges, usually because traders measure it differently from how it's actually applied.

The rule in one sentence

At 00:00 UTC we record the higher of your balance or equity; during that day, your equity must not fall more than 5% below it.

Three things that catch traders out

It's measured on equity. Open losing positions count, even if you never close them at that price.
Floating profit raises the base. If equity is above balance at the reset, the higher equity figure is used.
It resets at a fixed time, 00:00 UTC, not 24 hours after your first trade.

Four worked examples

1. A clean start

Balance and equity are $100,000 at the reset. The limit is $5,000, so equity must stay above $95,000 all day.

2. Floating profit at the reset

Balance is $102,000, but an open trade takes equity to $103,000. The base is $103,000, the limit is $5,150, and the floor for the day is $97,850.

3. Floating loss at the reset

Balance is $102,000 and equity is $100,500 because of an open loss. The higher figure, the balance of $102,000, is used, so the floor is $96,900. That leaves only $3,600 of room from where equity actually is.

4. Two losing trades

From a $100,000 base you lose $2,600 on one trade and have an open position down $2,500. Equity is $94,900, below the $95,000 floor, so the account breaches even though your closed loss is only $2,600.

How to stay well inside it

Set your own daily stop at about half the limit, $2,500 on this account.
Add up the stop-loss risk of all open positions before opening another.
Close or reduce positions before the reset if a floating loss would leave you little room tomorrow.

The full definition is on the trading rules page.

By the Sim2Funded team. Educational content, not investment advice.