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Max Daily Loss rule explained
Max Daily Loss rule explained

Guide to the Max Daily Loss rule

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Written by PipFarm
Updated today

Introduction to the Max Daily Loss rule

The Max Daily Loss rule refers to the maximum daily loss your account can incur in a single trading day before violating the risk management rule. The end-of-the-day (EOD) is 22:00 GMT in the winter and 21:00 GMT during US Daylight Savings, when US markets close.

By default, the Max Daily Loss limit is 3% of your previous EOD balance. The daily loss limit is not a fixed value and will change every time the previous EOD balance changes. Your account will be disqualified if your current equity falls below the Max Daily Loss limit.

The Max Daily Loss rule applies to all our challenges and simulated funded accounts. If you breach this rule, your account will be breached.

Your Max Daily Loss limit may be higher if you are Rank 4 or above in our Experience Program.

Max Daily Loss limit calculation

You do not need to calculate the Max Daily Loss limit; it is calculated in real time and displayed in your dashboard.

The calculation for the Max Daily Loss limit is the following:

Previous EOD balance - (previous EOD balance * max daily loss)

Example #1

If your initial balance is $100,000 and your Max Daily Loss is 3%, your initial Max Daily Loss limit is $97,000, meaning you cannot lose more than $3,000 on that trading day.

$100,000 - ($100,000 × 0.03) = $97,000

Example #2

A new trading day begins at 22:00 GMT each day (21:00 during US Daylight Savings). If your end-of-day balance increases to $101,000, your Max Daily Loss will be recalculated based on the closing balance of the previous day/opening balance of the new day. In this case, your Max Daily Loss limit will become $97,970, meaning you cannot lose more than $3,030 on that trading day.

$101,000 - ($101,000 * 0.03) = $97,970

Example #3

If your balance falls to $98,000 by the end of the day, your Max Daily Loss will be $95,060 the following day, meaning you cannot lose more than $2,940.

$98,000 - ($98,000 * 0.03) = $95,060

Can I increase my Max Daily Loss?

Yes. You can increase your Max Daily Loss to 4% Experience Program after you achieve Rank 4 in our Experience Programs.

Can I breach an account in profit?

Yes. Technically, because the Max Daily Loss is lower than the other maximum loss limits, there is a possibility that you can breach an account while in profit. However, we offer a payout protection feature, allowing you to keep your profits even if you breach an account.

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