One word in the daily loss limit's definition matters more than the rest: equity. Read it as "balance" and an open position can fail a challenge before a single trade is closed.
The rule
The daily loss limit is the most your account may fall in a single trading day. On Classic it is 5% of your equity at the start of that day. On Direct it is 4%. It is worked out again at the start of every day, so it moves with your account. On the first day, when your equity is the account size, that is:
- Classic: $500 on a $10,000 account, $1,250 on $25,000, $2,500 on $50,000 and $5,000 on $100,000.
- Direct: $400 on a $10,000 account, $1,000 on $25,000, $2,000 on $50,000 and $4,000 on $100,000.
Reaching the limit fails the challenge. It takes effect at once: no grace period and no partial reset.
Equity, not balance
Your balance changes only when a trade closes. Your equity is your balance plus the result of every position that is still open. The daily loss limit is measured on equity, so a losing position counts against the limit while it is open.
An example
Take a Classic $10,000 account on its first day, with a daily loss limit of $500. You start the day with no open positions. By mid-morning you have closed two trades for a loss of $200. A third position is still open, and it is $300 down.
Your balance shows a loss of $200 for the day. Your equity shows a loss of $500. The limit is reached and the challenge fails, even though the third trade was never closed.
What the limit does not do
- It does not stay the same size. After a good day the next day's allowance is larger, and after a losing day it is smaller, because it is a share of that day's starting equity.
- It does not carry over. An allowance you did not use today is not added to tomorrow's.
- It does not change with leverage. You choose your leverage when you buy, from 1:10 to 1:500. Higher leverage magnifies both gains and losses, so the same limit can be reached with a smaller move in the market.
The daily limit and the maximum loss
The maximum loss is a different rule. It is the floor for the account as a whole: 10% of the starting balance on Classic and 6% on Direct, also measured on equity. It is set once from your starting balance and never moves. Reaching it fails the challenge too.
On a Classic $10,000 account, that floor sits at $9,000 of equity. The daily limit can stop a single bad day; the maximum loss stops a run of them.
Habits that follow from the rule
- Know your limit in dollars before the day starts, not only as a percentage.
- Count what is open. A position that is losing counts now, not when you close it.
- Positions may be held overnight and over the weekend. Trading costs count too: a commission when a trade opens and when it closes, a price markup on some symbols, and holding costs on positions kept overnight all come off your simulated balance, so they count towards the limit.
The full rules, with the figures for every route and account size, are on the rules page.
All trading is simulated. Rewards are based on performance and are not guaranteed.