Your daily drawdown limit is a fixed dollar amount calculated once from your initial account balance. On a $100,000 account the daily loss limit is 4% which equals $4,000. This $4,000 amount stays fixed for the life of the account. At 5 PM EST each day, the system stores your equity at that moment. Your breach level for the next trading day is calculated by subtracting $4,000 from that stored equity. If your equity drops below that level at any point during the trading day, your account is breached.
Example
- Day 1 reset: Your equity at 5 PM EST = $100,000. Daily loss limit = $4,000 (fixed). Breach level for Day 2 = $100,000 − $4,000 = $96,000. Your equity must not drop below $96,000 on Day 2.
Day 1: Trader makes $2,000. Equity at 5 PM EST = $102,000. The system stores $102,000 as the new starting equity. Breach level for Day 2 = $102,000 − $4,000 = $98,000. The $4,000 daily loss amount does not change — only the breach level updates based on stored equity.