Prop firm daily drawdown: how the limit is measured
A prop firm’s daily drawdown limit is the most your account may fall in one trading day, usually 3–5% of the account size. Most firms check it against equity, so open trades count, and reset it at midnight on their server clock. What differs is where today’s floor starts: the day’s opening balance, the higher of balance and equity, or a percentage of either.
The daily limit ends more challenges than the overall drawdown, because it is easy to misread. This guide explains how the prop firm daily drawdown is calculated, why trades held overnight change it, how the main firms set it, and how to set an EA’s daily guard so it stops before the firm does.
What the daily drawdown limit is
At each daily reset the firm sets an equity floor for the day. If your equity touches it at any moment, the account fails, even if price recovers a minute later. Three things decide where the floor sits:
- The size of the limit: usually 3–5%, taken either from the initial account size or from the day’s starting value.
- The reference point: the balance at the reset, or the higher of that balance and the equity.
- The reset time: usually midnight on the firm’s server clock, which is rarely your local midnight.
Equity is the balance plus or minus the profit or loss of open trades. FTMO, for example, defines it as balance plus open positions’ profit or loss, plus or minus swaps, minus commissions.
Three ways firms set today’s floor
The same account can have very different room depending on the method. In both examples the initial account is $100,000, the limit is 5% (3% for E8 One’s preset), the balance at the reset is $102,000 and an EA held one trade overnight.
| Method | Floor | Open trade +$1,500 at the reset (equity $103,500) | Open trade −$1,000 at the reset (equity $101,000) |
|---|---|---|---|
| Starting balance minus 5% of the initial account (FTMO 2-Step) | $102,000 − $5,000 | Floor $97,000, room $6,500 | Floor $97,000, room $4,000 |
| 5% of the higher of starting balance or equity (FundingPips 2-Step Standard) | Higher value − 5% of it | Floor $98,325, room $5,175 | Floor $96,900, room $4,100 |
| 3% of the day’s starting balance (E8 One preset) | $102,000 − 3% | Floor $98,940, room $4,560 | Floor $98,940, room $2,060 |
Two lessons follow. With the “higher of” method, open profit carried over the reset is part of today’s reference, so if that trade gives back its gain, it uses up today’s limit before you open anything new. And with every method, a losing trade held overnight starts the new day already part of the way to the floor.
How the main prop firms set it
| Firm and plan | Daily limit | Today’s floor is measured from | Resets at |
|---|---|---|---|
| FTMO 2-Step | 5% of initial capital | Balance at the reset; equity must stay above the floor | 00:00 CE(S)T |
| FTMO 1-Step | 3% of initial capital | Same method as the 2-Step | 00:00 CE(S)T |
| FundedNext Stellar 2-Step | 5% of initial balance | The day’s closed and open losses; profit made during the day adds to the room | Midnight, server time |
| FundingPips 2-Step Standard | 5% | Higher of the day’s starting balance or equity | 00:00 platform time |
| E8 One | 3% preset, adjustable | The day’s starting balance | Each trading day |
| Alpha Capital Pro 10% | 5% | Starting balance (balance-based); breaches are checked on live equity | 00:00 GMT+2 |
| Alpha Capital One 10% | 4% | Higher of starting balance or equity | 00:00 GMT+2 |
Rules as published on each firm’s help pages on 6 November 2026. Firms change them often, and your dashboard is the final word. For each firm’s rules on EAs, news and banned strategies, see our prop firm EA rules comparison.
Why trades held overnight matter
Alpha Capital’s own example shows the effect. On its Pro 10% plan, a $100,000 balance with $101,000 equity at the reset means equity must stay above $95,000 all day. If equity is $99,000 at the reset instead, the $5,000 daily allowance shrinks to $4,000, because the floating loss already counts.
Before the reset, look at what the EA is holding. On a “higher of” firm, banking an open profit before midnight keeps it from raising today’s reference. On any firm, a large floating loss carried into the new day leaves less room than the headline limit suggests.
Daily limit vs maximum loss: static and trailing
The daily limit resets every day. The maximum loss covers the life of the account and comes in two kinds:
- Static: a fixed floor below the initial balance, such as FTMO 2-Step’s 10%, which on a $100,000 account is $90,000 whatever happens later.
- Trailing: a floor that rises with the account. On FTMO 1-Step it trails the highest balance at midnight and never falls: a $104,000 midnight balance lifts the floor to $94,000, and it stays there if the balance drops. E8 One uses a 4% trailing maximum that stops rising once the floor reaches the initial balance.
A trailing maximum gets tighter after a winning run, so an EA’s overall guard has to move up with it.
How to set an EA’s daily guard
- Match the basis. If the firm checks equity, the guard must watch equity, including open trades, not just closed profit.
- Match the clock. Reset the guard at the firm’s reset time on the server clock, not at your local midnight.
- Set it below the limit. A guard at about 80% of the limit, 4% when the limit is 5%, leaves room for slippage and for trades that close a little past their stop.
- Size trades to the guard. With a $4,000 guard and $500 risk per trade (0.5%), eight full losses in a row reach the guard; at 1% risk, four do.
- Close everything when it triggers. The guard should close open trades and stop the EA for the day, not just block new entries.
Our prop firm drawdown calculator does the arithmetic. Enter the initial size, today’s starting balance and equity, the daily limit and how your firm measures it (day’s starting balance, starting equity or the higher of the two), and it shows today’s floor, the room left and a suggested guard level. Work out the lot size for each trade with the position size calculator.
Setting up the rest of the EA? Follow our guide to setting up an EA for a prop firm challenge, and see why a low drawdown record matters on a funded account.
Prop firm daily drawdown FAQ
What is daily drawdown in a prop firm?
The most your account may lose in one trading day, measured from a floor the firm sets at each daily reset. If equity touches the floor, the account fails.
Does daily drawdown include floating losses?
At most firms, yes. The floor is checked against equity, which includes open trades. FTMO, FundedNext and Alpha Capital all say so on their help pages.
What time does the daily drawdown reset?
At the firm’s daily reset on its server clock: 00:00 CE(S)T at FTMO, 00:00 GMT+2 at Alpha Capital and midnight server time at FundedNext. Check your dashboard for the exact time.
What is the difference between daily drawdown and maximum drawdown?
The daily limit resets every day. The maximum loss covers the whole life of the account and can be static, fixed below the initial balance, or trailing, rising as the account grows.
How do I avoid breaking the daily drawdown with an EA?
Use a daily guard that watches equity, resets on the firm’s clock and stops at about 80% of the limit, and size trades so a normal losing streak stays well inside it.
Risk warning. Trading forex and CFDs on margin carries a high risk of losing money. The examples on this page are arithmetic, not results of any EA. Prop firm rules change often; your firm’s terms and dashboard are the final word.
Sources, checked 6 November 2026: FTMO trading objectives; FundedNext daily loss limit; FundingPips 2-Step Standard; E8 Markets daily drawdown; E8 One; Alpha Capital daily risk limits.