Daily loss limits explained

On Runtiler, three things define the daily limit:

• Its size is a % of the account's size, not of the day's balance. 4% on a $25,000 account is $1,000 every day, whatever your balance.
• The day runs from 00:00 to 00:00 UTC. That's 19:00 in New York in winter and 20:00 in summer.
• The day's start is the higher of your balance and your equity at 00:00 UTC.

The line for the day is the day's start minus the limit. It's judged on equity (your balance plus open profit or loss), live, on every price. Equity at the line reaches the limit, not only below it.

All on a $25,000 account with a 4% daily limit ($1,000).

A plain day

You're flat at 00:00 with a balance of $25,000. The line is $24,000. You lose $600 on one trade and $400 on the next. Your equity is $24,000: you've reached the limit.

Open profit at 00:00

At 00:00 your balance is $25,000 and you're in a trade showing +$800. Your equity is $25,800, so that's the day's start. The line is $24,800.

If the trade comes back and turns into a $200 loss, your equity is $24,800, and you've reached the limit. Your balance is only $200 down, but the $800 of open profit you held at 00:00 counted as part of the day.

Open loss at 00:00

At 00:00 your balance is $25,000 and you're in a trade showing −$300. Your equity is $24,700. The day's start is the higher of the two, $25,000, so the line is $24,000. The $300 your trade is already down uses part of today's $1,000.

When the max loss is closer

The same account has a fixed 8% max loss: its floor is $23,000. After a few hard days you start a day flat at $23,600. The daily line is $22,600, but the floor at $23,000 is higher. Today you have $600 of room, not $1,000. Whichever line is closer is the one that matters. See Trailing vs static drawdown.

Fees count too

The overnight fee on positions you hold is charged just after 00:00 UTC, so it counts toward the new day. It's small, but on a large position held for several nights it adds up. See Overnight fees.

Each challenge says on its Rules tab which of two things happens.

The account ends. Every open position closes at the market and every pending order is cancelled. You can buy the challenge again and start over.

Trading pauses until 00:00 UTC. Every open position closes at the market and every pending order is cancelled, but the account stays open. You can't place new trades until the new day starts at 00:00 UTC; then trading resumes as normal. Two details:

• A paused day can't pass a step, even if your balance is over the target.
• A position on a market that's closed at that moment (stocks at night, gold at the weekend) stays open and closes at the first price when its market reopens.

The max loss is still in force during a pause. The details are in Daily loss limit.

Set your own stop well before the line

A good habit is a personal daily stop at about half the limit. With a $1,000 limit, stop for the day at $500 down. You'll rarely get near the real line, and a bad day stays a bad day, not the last one.

Some traders use a count instead: stop after three losing trades in a row. Either works if you keep to it.

Size for your worst day

Add up what you could lose if every trade you plan for the day hits its stop. If you take up to 4 trades a day and risk 0.5% of the size on each, your worst day is 2%. That leaves room under a 4% limit for a stop that fills worse than planned.

Stops fill at the market, so in a fast move or at a gap they can fill past your price. Leave room for that. See Stop loss and take profit.

Know where you are at 00:00 UTC

Because the day's start is the higher of balance and equity, a large open profit at 00:00 raises the bar for the new day. If you're holding a big winner into 00:00, consider taking some of it, or moving your stop so that giving it back can't reach the new line.

Don't trade to win it back

After a loss, the urge is to trade bigger to get back to even before the day ends. That is how many daily limits are reached. A day has no target: tomorrow starts with a fresh limit. See Managing a losing streak.

If you're choosing between two challenges, a pause is more forgiving: a bad day costs you the rest of the day, not the account. Rules that forgive more cost more, so a pause usually makes the price a little higher. If you trust your own daily stop, an end may cost less. If you've ever had a day get away from you, a pause is worth paying for.