Daily loss limits explained: balance vs equity, reset times, fail or pause

Educational only, not financial advice. Simulations and backtests are models, not promises. Check every rule with your own firm.

The daily loss limit ends a lot of challenges. Blue Guardian writes on its rules page that exceeding the maximum daily drawdown accounts for over 73% of all its account breaches. Yet "5% daily" means different things at different firms.

Four questions to ask about any daily limit

1. What is it measured from: the initial balance, or the balance or equity at the start of the day?
2. Do open (floating) losses count, or only closed trades?
3. When does the trading day reset, and in which time zone?
4. What happens when you hit it: is the account failed, or are you paused until tomorrow?

What the limit is measured from

The size of the limit and the starting point are two separate rules. FTMO’s 2-Step uses 5% of the initial capital, counted from your balance at 00:00 CE(S)T. FundingPips uses a percentage of the day’s own starting point: 5% (or 3%) of the higher of the opening balance or opening equity. Blue Guardian combines the two: a fixed 4% of the initial balance, subtracted from the higher of balance or equity at 5:00 pm EST.

The firms’ own examples show the difference:

• FundingPips, $100K: opening balance $105,000, opening equity $107,000. The baseline is the higher one, $107,000, and 5% of it is $5,350, so equity can’t drop to $101,650 that day.
• Blue Guardian, $100K: an open trade is $2,000 in profit at 5:00 pm EST, so equity is $102,000. The limit is 4% of the initial balance, $4,000, so equity can’t fall below $98,000 the next day.

Notice the trap in both: a floating profit at the reset raises the baseline. If that trade then gives the profit back, it uses up part of your daily room even though your balance never fell.

Open losses count

At the CFD firms in our table the daily limit is checked on equity, so open losses count before you close them. FundingPips says both floating P&L and closed positions count toward the daily loss, and FTMO measures its limits on equity, including open P&L, swaps and commissions. A stop you never hit is no protection if the open loss reaches the limit first. The glossary entry on balance vs equity has more on this.

Touching the limit is enough. FundingPips counts the moment equity touches or drops below the limit as a violation, even if the trade recovers and closes in profit.

When the day resets

Reset times differ by firm and are rarely midnight where you live: 00:00 CE(S)T at FTMO, 00:00 platform time (UTC+3) at FundingPips, 5:00 pm EST at Blue Guardian, 6:00 PM ET for Apex’s trading day, and 5:00 pm to 4:00 pm Central Time at Bulenox. If you hold a trade through the reset, its floating P&L becomes part of the next day’s starting point.

Blue Guardian’s second example shows the other direction. If the open trade is $2,000 in loss at 5:00 pm EST, the $100,000 balance is higher than the $98,000 equity, so the new day’s floor is $96,000. If the loss deepens by another $2,000 the next day, you’re at the floor.

Fail, pause or nothing

The consequence varies even more than the calculation:

• Hard breach: most CFD firms fail the account. FundingPips lists the daily limit as a hard breach with immediate closure, and Blue Guardian breaches the account when the daily loss exceeds its limit. Earn2Trade does the same on futures: reaching the $550 daily limit on the TCP25 fails the evaluation.
• Pause: Topstep’s optional $1,000 limit on the 50K Combine liquidates and pauses you for the session without a rule violation. Apex’s $1,000 limit and Bulenox’s $1,100 limit (EOD option, 50K) work the same way.
• None: Take Profit Trader’s test, My Funded Futures Rapid, Tradeify Select and Alpha Futures Standard have no daily limit in the evaluation. Your max loss still applies all day.

A pause is much kinder than a breach, but it isn’t free. It stops you on your worst days, and a trailing max loss still remembers the loss.

How to size around it

Count how many full losses fit inside the daily limit, and leave a buffer for slippage. With a 4% daily limit and 1% risk per trade, three losses leave you 1% from the limit, and a fourth lands exactly on it, which is a breach at firms that count touching the limit. Plan for three, not four.

The risk-per-trade planner does that count for you, and the daily loss tracker shows how much room is left during the day, from equity, with open P&L included. For the wider picture, see why traders fail prop challenges.