Two limits can end a CMC Funded challenge: the daily loss limit and the maximum loss. Both are measured on equity. The maximum loss is a fixed floor set by your starting balance, and the daily limit is a share of your equity at the start of each day. You can know exactly where each one sits before the day begins.
What you will learn
- Why the limits measure equity, which includes open positions
- The daily limit and the floor in dollars for every account size
- Why the daily limit moves with your account while the floor never rises
- How to work out the room you really have on any day
Open positions count against the limits
Your balance changes when a trade closes or a cost is charged. Your equity is your balance plus the running result of every open position. Both limits are measured on equity, so a losing position counts against them while it is still open.
Take a Direct $10,000 account on its first day, with a $400 daily limit. You start the day with no open positions and close two trades for losses of $120 and $130. A third trade is still open and is $150 down. Your balance shows a $250 loss for the day, while your equity shows a $400 loss. The limit is reached and the account ends, though the third trade never closed. There is no warning stage.
Trading costs count as well. Simulated trades carry trading costs, as they would on a live account: a commission when a trade opens and when it closes, a price markup on some symbols, and holding costs on positions kept overnight. All of these come off your simulated balance.
The limits in dollars
The daily limit is 5% of your equity at the start of each day on Classic and 4% on Direct. Other prop firms often call it the daily drawdown. The maximum loss sets a floor 10% below the starting balance on Classic and 6% below it on Direct. On the first day, when your equity is the account size, the figures are:
- $10K: Classic has a $500 daily limit and a $9,000 floor, Direct a $400 daily limit and a $9,400 floor.
- $25K: Classic $1,250 and $22,500, Direct $1,000 and $23,500.
- $50K: Classic $2,500 and $45,000, Direct $2,000 and $47,000.
- $100K: Classic $5,000 and $90,000, Direct $4,000 and $94,000.
Work out the day's limit before you trade, and write both numbers where you will see them while you trade.
The daily limit moves with your account
The daily limit is worked out again at the start of every day, from your equity at that moment. Say your Classic $10,000 account closes Monday at $10,600 with nothing open. Tuesday's limit is 5% of $10,600, which is $530. A losing day works the same way: a day that starts at $9,800 has a limit of $490.
An unused allowance does not carry over. A Monday that ends $100 down does not leave Tuesday with $900 to lose: Tuesday starts at $9,900, so its limit is $495.
So keep your risk per trade steady rather than raising it after a winning day, and set your own stop for the day well inside that day's limit.
The floor never moves
The maximum loss floor is set once, from your starting balance. On a Classic $10,000 account it is $9,000 and it stays there. Gains do not raise it, so at $10,600 you have $1,600 of room above it. Some firms use a trailing floor that follows your equity upwards. Classic and Direct use a fixed one, sometimes called a static drawdown.
Losses use up that room, and after a few bad days the floor can sit closer than the daily limit. Take a Direct $10,000 account with its floor at $9,400. Day one ends $350 down, at $9,650. On day two the daily limit is 4% of $9,650, which is $386, but the floor is only $250 away, so your real limit for day two is $250.
The room you have on any day is the smaller of two numbers: the daily limit, and your equity minus the floor.
A routine before the first trade
Work out four numbers before you place the day's first trade:
- Today's room, which is the smaller of your daily limit and your equity minus the floor.
- Your own stop for the day, set well inside that room. On a Classic $10,000 account with full room, stopping at $250 down (half the daily limit) is a sensible choice.
- Your risk per trade, and how many full losses fit before your own stop. At $50 a trade, that is five.
- Your open risk. Before you add a trade, count the losses on open positions as already taken.
Positions held overnight or over the weekend need extra care. Price can open beyond your stop after a gap, so the loss can be larger than you planned. Size anything you hold over a weekend with that in mind.
The rules page lists both limits for every account size, and lesson 2 shows how to size each trade against them.
Check your understanding
1. It is the first day of a Classic $25,000 account and you have no open positions. You close trades for a $700 loss, and an open trade is $550 down. What happens?
The daily limit is $1,250. Your closed and open losses together come to $1,250, so the limit is reached and the account ends. The open loss counts though the trade has not closed.
2. You have a Direct $50,000 account and start the day at $47,800 of equity with nothing open. How much room do you have today?
$800. The daily limit is 4% of $47,800, which is $1,912, but the floor at $47,000 is only $800 away, and the smaller number is your real limit.
3. Your Classic $10,000 account started Monday at $10,000 and ended it at $10,900 with nothing open. What are Tuesday's daily limit and floor?
$545 and $9,000. The daily limit is 5% of the $10,900 you start Tuesday with, and the floor never moves.
Key points
- Both limits are measured on equity, so open losses count before you close them.
- On the first day of a $10K account, Classic gives you $500 and a $9,000 floor, and Direct gives you $400 and $9,400.
- The daily limit is 5% (Classic) or 4% (Direct) of your equity at the start of each day, so it moves with your account, and unused room does not carry over.
- The floor is fixed. Gains add room above it, and losses use that room up.
- Your real limit each day is the smaller of the daily limit and your equity minus the floor.
Next lesson: Write a trading plan that fits your challenge limits
All trading is simulated. Rewards are based on performance and are not guaranteed.