What is daily drawdown and how is it calculated?
The most you may lose in one trading day, the difference between the basis of the calculation (balance) and what is measured (equity), and a worked example per product.
Daily drawdown is the largest fall your account is allowed in a single trading day. On the Master account that figure is 5%, and on Phoenix and Triple it is 4%. Crossing it breaches the account.
The exact definition
Daily drawdown is the ceiling on how far your account may fall below its starting point for that day. The limit exists so that one bad day cannot wipe out the whole account, and so the evaluation measures the consistency of your trading rather than the luck of a single day.
The permitted limit is calculated from the balance at the start of the day and stays fixed all day. But what is measured is your live equity — profit and loss on open trades counts moment by moment, and a trade does not have to be closed for its loss to count.
The formula
Where the rule applies
| Product | Phase one | Phase two | Phase three | Funded account |
|---|---|---|---|---|
| Master | ✓ | ✓ | — | ✓ |
| Phoenix | ✓ | ✓ | — | ✓ |
| Triple | ✓ | ✓ | ✓ | ✓ |
This rule applies in every phase and on the funded account.
| Product | Permitted percentage | On a $10,000 account |
|---|---|---|
| Master | 5% | $500 |
| Phoenix | 4% | $400 |
| Triple | 4% | $400 |
A worked example
- Permitted daily fall: 5%
- Today's permitted loss: $10,200 × 5% = $510
- Today's equity floor: $10,200 − $510 = $9,690
Your equity must not fall more than $510 at any point today. Crossing that — even momentarily, and even if the trade later closes in profit — counts as a daily drawdown breach.
- You closed today at a balance of $10,600.
- Tomorrow's start-of-day balance: $10,600
- Tomorrow's permitted loss: $10,600 × 5% = $530
Because each day's limit is calculated from that day's opening balance, today's profit slightly widens tomorrow's risk budget.
What counts towards the calculation?
- Losses on trades closed that same day
- Floating losses on open trades, in real time
- Commission and swap charged to the account
- Losses from previous days — each day is calculated afresh
- Unrealised profit that has not yet settled into the balance does not act as a buffer
When does it reset?
The daily drawdown limit is recalculated at the start of each server trading day, from the balance at that moment. Note that the “day” is defined by the broker's server clock, not your local time; account for that difference before trading late in the day.
Common mistakes
- Assuming only closed-trade losses count — floating losses are counted moment by moment too.
- Measuring the fall against live balance instead of live equity — equity is what is measured.
- Leaving a trade open across the server day change, forgetting the new limit is set from the balance at that moment.
- Ignoring commission and swap when working out your distance to the floor.
Frequently asked questions
What if equity crosses the limit for just a moment?
Daily drawdown is measured on live equity, so even a momentary breach can be recorded as one. That is why it is worth keeping a safety margin above the floor rather than trading down to the last permitted dollar.
Do floating losses on open trades count?
Yes. The calculation runs on equity, and equity includes the profit and loss of open trades. A trade does not need to be closed for its loss to affect daily drawdown.
Does yesterday's profit affect today's limit?
Indirectly, yes. Because each day's limit comes from that day's opening balance, closing the previous day higher makes today's absolute limit larger. But that limit is fixed for the day and does not grow with the profit you make during it.
Related articles
The cap on how far the account may fall from its initial balance, how it differs from daily drawdown, and a worked example per product.
Why drawdown is calculated on equity, and when the two numbers diverge.
Propia's staged framework for reviewing high-risk behaviour: yellow versus red flags, what triggers them, and how they are cleared.
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