TL;DR
The daily loss limit is a per-day floor, recomputed at the start of each trading day from either balance or equity. It is independent of max drawdown: you can be up 6% on the challenge and still bust on a single bad morning. Most firms include open floating P&L in the calculation, so an unrealised drawdown breaches even if you never close the losing trade. Always size so a full stop-out plus adverse slippage cannot reach the daily floor.
Ask a failed challenge-taker why they busted and most will say "drawdown." Pull the trade log and roughly six times out of ten the real cause is the daily loss limit, a separate, stricter, more easily tripped rule that almost every firm enforces alongside the max drawdown. The two are routinely conflated, and the conflation is expensive. Max drawdown is a single floor for the whole eval. The daily loss limit is a fresh floor every single day, and it does not care that you are up 6% on the account overall.
Why the daily cap is structurally harder than max drawdown
Max drawdown is a once-per-eval test: cross the floor a single time and the account is dead, but the floor is fixed (static firms) or only ratchets upward (trailing firms). The daily loss limit is a repeated test, you face it again every trading day, and each day the floor is re-set relative to where you started that day. A strategy that survives 19 days can bust on day 20 against a daily cap it never came close to on the other 19. The probability of tripping a repeated daily test over a 20–30 day eval is far higher than tripping a single max-drawdown floor, even when the daily cap is the larger percentage.
There is a second structural trap: the anchor. Most firms anchor the daily floor to the higher of start-of-day balance or start-of-day equity. If you carry an open winning position overnight, your start-of-day equity is high, the floor is set high, and an ordinary pullback the next morning can breach a floor that balance alone would never have set. Traders who scale into overnight winners are the most common daily-cap casualties for exactly this reason.
How each supported firm calculates the daily floor
The percentage is the headline; the anchor and the floating-P&L treatment decide who actually busts. Here is the daily-loss-limit shape across the supported firm set, as captured in the most recent firm-rule audit:
| Firm | Daily limit | Anchor | Counts floating P&L? |
|---|---|---|---|
| FTMO Phase 1 | 5% | Higher of start-of-day balance or equity | Yes, open losses count |
| FundingPips Zero | 3% | Start-of-day balance | Yes, equity-based intraday |
| Apex Trader Funding | No daily cap | Trailing drawdown instead | N/A, uses trailing threshold |
| MyForexFunds | 5% | Start-of-day balance | Yes |
| The5ers High Stakes | No daily cap | Max-drawdown only | N/A |
| GetLeveraged Turbo | 4% | Start-of-day equity | Yes, strictest anchor |
Two firms, Apex and The5ers High Stakes, have no separate daily cap, which makes them structurally easier on day-to-day variance and is part of why intraday-volatile strategies sometimes pass them after busting FTMO. FundingPips at 3% is the tightest percentage; GetLeveraged anchoring to start-of-day equity is the most punishing on overnight winners.
The four ways the daily cap silently breaches you
- Floating-loss breach: you hold a losing position open, never close it, and the unrealised loss alone crosses the daily floor. At every firm that counts floating P&L this is an instant fail, closing the trade afterwards does not undo it.
- Overnight-equity anchor: you carry a winner overnight, the floor anchors to your inflated start-of-day equity, and a normal morning pullback breaches a floor balance alone would never have set.
- Slippage-on-stop breach: your stop sits just inside the daily floor, but a gap or thin-liquidity fill executes past it, and the realised loss lands below the floor.
- Stacked-position breach: two or three concurrent positions each within their own risk budget, but their combined adverse move crosses the daily floor at once. Per-trade risk was fine; aggregate daily risk was not.
How to size so the daily cap never decides your eval
The fix is mechanical, not discretionary. Size every position so that a full stop-out, plus a slippage allowance, on all concurrent open trades cannot reach the daily floor. The rule we apply on the firm-mode position-sizing calculator: cap aggregate open risk at one third of the daily-loss headroom, measured against the firm's actual anchor, and treat floating P&L as if it were already realised. That leaves room for the slippage-on-stop and stacked-position breaches, which discretionary "I'll just watch it" sizing does not.
- Find the firm's daily-cap anchor (balance vs equity) and percentage, use the table above or the per-firm page.
- Compute the dollar daily floor from your start-of-day figure, not your account size.
- Set aggregate open risk (all positions, at full stop + slippage) to ≤ ⅓ of that floor.
- If you hold positions overnight, recompute the floor against tomorrow's start-of-day equity, not today's balance.
- Pre-flight the strategy through the firm-rule-aware backtester, which flags the first daily-cap breach day separately from the max-drawdown breach day.
Practical workflow on Glitch Executor
The firm-rule-aware backtest evaluates the daily loss limit as its own gate, day by day, with the correct anchor and floating-P&L treatment per firm, so a strategy that passes max drawdown but trips the daily cap on day 12 fails the simulation exactly the way it would fail the live eval. The verdict card shows the first daily-cap breach day separately from the first max-drawdown breach day, so you can see which rule is the binding constraint. The position-sizing calculator in firm mode then applies the one-third-of-daily-headroom cap automatically, accounting for the firm's anchor and a configurable slippage allowance.
Citations
FAQ
- What is the difference between the daily loss limit and max drawdown?
- Max drawdown is a single floor for the entire evaluation, cross it once and the account is dead, but the floor is fixed or only ratchets up. The daily loss limit is a fresh floor recomputed at the start of every trading day, relative to that day's starting balance or equity. You can be far above your max-drawdown floor and still bust the daily cap on one bad morning.
- Does the daily loss limit count open (floating) losses, or only closed trades?
- At most firms, FTMO, FundingPips, MyForexFunds, GetLeveraged, it counts floating P&L. An unrealised loss that crosses the daily floor breaches the account immediately, even if you never close the position. Only a minority of firms measure on closed-equity alone. Always check the per-firm rule before assuming you can hold a loser through the floor.
- Is the daily floor anchored to my balance or my equity?
- It depends on the firm. FTMO uses the higher of start-of-day balance or equity. FundingPips anchors to start-of-day balance. GetLeveraged anchors to start-of-day equity, which is the strictest because carrying an overnight winner inflates the anchor and tightens the next day's headroom.
- Which supported firms have no daily loss limit at all?
- Apex Trader Funding and The5ers High Stakes do not enforce a separate daily cap, they rely on a trailing or static max drawdown instead. That makes them structurally easier on day-to-day variance, which is why some intraday-volatile strategies pass them after busting a daily-cap firm like FTMO or FundingPips.
- How should I size positions to avoid a daily-cap breach?
- Cap aggregate open risk, all concurrent positions, at a full stop-out plus a slippage allowance, at one third of your daily-loss headroom, measured against the firm's actual anchor. Treat floating P&L as if already realised. The firm-mode position-sizing calculator applies this automatically.
- Why did I bust the daily cap when I was up overall on the challenge?
- Because the daily cap ignores your overall challenge profit. It re-anchors every day to that morning's starting figure. Being up 6% on the eval gives you zero extra daily-cap headroom, the floor was reset to your start-of-day number, and a single day's loss of more than the cap percentage ends the account regardless of cumulative profit.
- Does holding a position overnight change my daily-cap risk?
- Yes, significantly, at any firm anchored to equity. A winning overnight position raises your start-of-day equity, the floor anchors to that higher figure, and an ordinary morning pullback can breach a floor that balance alone would never have set. Recompute your daily floor against tomorrow's expected start-of-day equity before holding overnight.
Related firm rule pages
This post references the rule sets for the firms below. The full rule + payout brief for each is on its dedicated page.
How we maintain accuracy
Reviewed by Ryan Tran, Strategy Lead, Glitch Executor. Every quantitative claim cites a primary source; firm-rule values come from the firm-rule registry audited quarterly in this repo. No paid placements, no fabricated reviews.
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Written by Ryan Tran
Strategy Lead · Glitch ExecutorWrites on prop-firm rule modelling, backtest correctness, and why most "passed challenge" stories don't reproduce.
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