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What is Max Daily Loss (daily drawdown) and how is it calculated?

Program Instant Funding One Phase Two Phase
Severity Critical

TL;DR

Max Daily Loss is your daily equity stop. It’s equity-based, includes floating PnL + costs, and resets at 16:00 CT. Touch it = hard breach.

Important distinction:

  • One-Phase and Two-Phase (and their funded accounts): Max daily drawdown does not trail intraday, it is set at the start of the day and it remains the same for the whole day
  • Instant Funding accounts: Max daily drawdown trails intraday. It is set at the start of the day, but if your equity goes up, the max daily DD trails up with it.

How it works

Max daily drawdown for One-Phase and Two-Phase accounts

  1. At 16:00 CT, your “day start equity” is set.
  2. Your daily loss buffer = (Daily % × day start equity).
  3. If at any moment your equity drops below day start equity − buffer, you breach.
  4. Equity includes open trades (floating) and costs (commissions, swaps; spreads/slippage impact your equity too).

Max daily drawdown for Instant Funding Accounts

  1. At 16:00 CT, your “day start equity” is set.
  2. Your daily loss buffer = (3% × day start equity).
  3. If at any moment your equity drops below day start equity − 3%, you breach.
  4. Equity includes open trades (floating) and costs (commissions, swaps; spreads/slippage impact your equity too).
  5. In Instant Funding accounts the max daily loss limit is trails upwards based on equity: If your equity goes up, the max daily DD trails to Max Equity – 3%

Common gotchas

  • “But I would have closed green later” doesn’t matter. Breaches are moment-in-time.
  • If you’re trading near the limit, spread + commission can finish you.
  • The reset is 16:00 CT, not your laptop time.
  • If you have open trades at reset, your day start equity reflects that (so don’t “roll” big floating drawdown into a fresh day).
  • Give yourself a buffer. “I’ll manage it on the fly” kills accounts.
  • Instant Funding max daily loss trails intraday, One-Phase and Two-Phase does not.

Values table per account type

Program Max Daily Loss Reset time Basis
Two-Phase (challenge) 5% 16:00 CT Equity (floating included does not trail intraday)
One-Phase (challenge) 3% 16:00 CT Equity (floating included does not trail intraday)
Instant Funding 3% 16:00 CT Equity (floating included, trails intraday)
Funded (from challenges) Same risk profile as the program you qualified through (2-Step: 5%, 1-Step: 3%) 16:00 CT Equity (floating included does not trail intraday)

Example

Day start equity on two challenges are both = $52,000.

  • Two-Phase daily limit 5% → buffer $2,600 → breach line $49,400.
  • One-Phase/Instant Funding daily limit 3% → buffer $1,560 → breach line $50,440.

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