# What is Daily loss limit?

> A daily loss limit is the most a trader may lose in one trading day in a prop firm account, measured from a defined daily starting point; crossing it ends the account.

- Source: https://pipvalley.com/glossary/daily-loss-limit
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm, the daily loss limit (often called max daily loss) caps losses within a single day. It is usually a percentage of the starting account balance, and the key detail is the reference point: some firms measure from the day's starting balance, others from the higher of starting balance or equity at the daily reset.

The reset time matters as much as the percentage. Firms reset at a fixed server time, often midnight in a named time zone, or at the futures session open. Floating losses on open trades usually count toward the limit.

Most firms treat a daily loss breach as a hard breach that closes the account, though some programs use a soft breach that closes open positions and locks trading for the rest of the day.

## Why it matters

The daily loss limit is one of the two rules every trader checks before buying, and its exact calculation is the most common source of breach disputes. Publish the percentage, the reference point, the reset time with time zone, and whether equity or balance is used, with a worked example on the rules page and the same figures live in the dashboard.

## Example

On a $100,000 simulated account with a 5% daily loss limit measured from start-of-day balance, a trader starting the day at $102,000 breaches at $96,900 equity. Illustrative only.