DEFINITION
Daily Drawdown
The maximum percentage loss allowed in a single trading day. Calculated from the balance (or equity) at the start of the day. Breaching this limit at any point during the session fails the account immediately.
In depth
Daily drawdown is the most common reason prop firm accounts fail. It resets at the broker's server-time daily rollover (typically 5pm EST). Some firms calculate it from balance (closed P&L only) and some from equity (including floating P&L) — the latter is much stricter.
Example
A $100K account with 5% daily drawdown can lose up to $5,000 from the opening balance. If you hit -$5,001 at any moment, the account is failed.
Related terms
Max Loss
The total percentage loss allowed over the lifetime of a prop firm account. Typically 6–10%. Breaching the max loss at any point fails the account permanently.
Breach
Violating a prop firm rule — typically hitting the daily drawdown or maximum loss limit. A breach fails the challenge or funded account immediately and cannot be reversed.
Trailing Drawdown
A drawdown calculation method where the maximum loss limit trails the highest equity point reached. Used by Apex — locks in profits but creates an invisible rising floor.
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