Key points
- The basis decides the number: start-of-day balance, start-of-day equity or the initial balance are all in use.
- Most plans measure equity, so an open losing position counts before you close it.
- A breach can fail the account, lock the session or flatten positions — three very different outcomes.
- The day resets on the firm's clock, not yours.
What a daily loss limit is
A daily loss limit caps how much an account may lose within one trading day. It sits alongside the maximum loss rather than replacing it: the maximum loss ends the account over its lifetime, the daily loss ends the day — or the account, depending on the firm.
It exists because a firm can survive a slow decline it can see coming, but not a single session that takes the account through the floor before anyone reacts. The daily limit is the circuit breaker.
The basis is the whole calculation
A 5% daily loss means nothing until you know 5% of what. Three bases are in common use, and they diverge as soon as the account is not exactly at its starting balance.
| Basis | Measured against | Behaviour as the account grows |
|---|---|---|
| Start-of-day balance | The settled balance when the day opened | The allowance grows with banked profit and shrinks after losses |
| Start-of-day equity | Balance plus floating profit at the open | Similar, but an open position carried into the day changes the starting point |
| Initial balance | The account's original starting figure | Fixed for the life of the account, whatever it has gained or lost |
Take a $100,000 account with a 5% daily loss that is now at $110,000. On a start-of-day basis the allowance is $5,500; on an initial-balance basis it is $5,000 and will still be $5,000 at $150,000. The gap is small early and significant later.
Balance or equity: does an open position count?
The second half of the calculation is whether the running total includes unrealised losses. Most firms measure equity, which means an open losing position counts against the daily limit before you close it.
This catches people out in a specific way. A trader down $4,000 realised on a $5,000 allowance believes there is $1,000 left, holds a position that is $1,500 underwater, and is already in breach — even though closing it might have recovered. The limit was hit at the equity low, not at the moment of the decision.
Practically: if the plan measures equity, your stop placement is part of your daily-limit management, not separate from it.
What a breach actually does
Three outcomes are in use across the industry, and they are not variations of the same thing.
- Account fail — the evaluation or funded account is over. A reset fee, or a new purchase, is the only way back.
- Session lockout — trading is disabled for the rest of the day and resumes at the next reset. The account survives.
- Flatten only — open positions are closed at the limit and you may or may not be able to trade again the same day.
A plan with a tight daily loss and a session lockout is more forgiving than a plan with a generous daily loss that fails the account, and the headline numbers would tell you the opposite. Rex records the breach effect as its own fact and shows "what happens when the limit is breached" as missing where a firm does not publish it — which, in the current record, is every firm.
When the day resets
The reset time is the firm's, and it usually follows the market it serves rather than your timezone. Futures plans commonly reset with the CME session; Forex plans commonly reset at a stated server time.
Two consequences are worth planning around. A position held across the reset carries its unrealised loss into a fresh allowance, which can look like a reprieve and is not one if the plan measures equity. And a "day" that starts in the evening local time means an evening session and the following morning share one allowance.
When there is no daily limit at all
Some plans publish no daily loss limit. That is a real published value, and Rex records it as "No daily limit" rather than as missing data.
It is not automatically generous. A plan without a daily circuit breaker leans entirely on the maximum loss, so a single bad session can end the account outright instead of pausing it. Read the two limits together rather than treating the absence of one as a feature.
Checking a plan
- Find the amount and its unitA percentage or a currency figure. Currency figures do not scale with the account, so check the percentage they imply at your size.
- Find the basisStart-of-day balance, start-of-day equity or initial balance. If it is not published, the limit is not fully defined.
- Find out whether unrealised losses countAlmost always yes. If the firm says balance rather than equity, that is unusual and worth confirming.
- Find the breach effectFail, lockout or flatten. This changes the cost of a bad day by an order of magnitude.
- Find the reset timeAnd check what it means for the sessions you actually trade.
Every daily loss value in the record shows its unit and its basis, and links to the page it was read from. Open any option in the challenge explorer and click the marker beside the value.
Common questions
Does a daily loss breach always end the account?
No. Some firms fail the account, others lock the session and let you return the next day. The outcome is published per plan, and where it is not, Rex says so rather than assuming either outcome.
Does the daily limit include commissions and fees?
Usually yes, because it is measured on the account's balance or equity, which already reflect them. Firms that treat this differently say so.
If I am up on the day, does my allowance grow?
On a start-of-day basis, no — the allowance was set when the day opened. Intraday profit gives you distance from the limit but does not raise it.
Why does Rex show a daily loss with "basis not published"?
Because the firm stated a percentage and not what it is measured against. Filling in a default would decide the size of the limit on the firm's behalf.
Compare the options this guide mentions
Opens 3 challenge options side by side, with every field that cannot honestly be compared marked rather than averaged.