Every mainstream prop firm sets a daily loss limit: the most your account may lose in a single trading day before it is closed. The percentage is simple. What catches traders is the detail underneath: what counts as a loss, which number it is measured from, and when the day starts.

How FTMO measures it

FTMO publishes its method in full, which makes it a useful worked example. On the 2-Step Challenge the Maximum Daily Loss is 5 per cent of the starting account size; on the 1-Step it is 3 per cent. The limit is reset every day at midnight Central European time (00:00 CE(S)T), and it is set from your balance at that moment. Your equity, meaning your balance plus or minus the profit or loss on open trades, swaps and commissions, must not fall below it.

How FTMO measures it. Daily loss amount: FTMO 2-Step 5% of the starting account, FTMO 1-Step 3% of the starting account; Measured from: FTMO 2-Step Balance at 00:00 CE(S)T, FTMO 1-Step Balance at 00:00 CE(S)T; Tested against: FTMO 2-Step Equity, including open trades, FTMO 1-Step Equity, including open trades; On $100,000: FTMO 2-Step $5,000 a day, FTMO 1-Step $3,000 a day
How FTMO measures it: the figures from this section at a glance.
FTMO 2-StepFTMO 1-Step
Daily loss amount5% of the starting account3% of the starting account
Measured fromBalance at 00:00 CE(S)TBalance at 00:00 CE(S)T
Tested againstEquity, including open tradesEquity, including open trades
On $100,000$5,000 a day$3,000 a day

Because the amount is a fixed share of the starting account, it does not grow as you make money. On a $100,000 2-Step account the daily allowance is $5,000 whether your balance is $95,000 or $108,000.

Watch this on video

The Daily Loss Limit, Explained, in 2:59

The daily loss limit counts open trades, so you can fail on a winning day. Set your own stop at half the limit.

Chapters

Why equity is the trap

Most traders think of the limit as closed losses. Measuring equity changes that. An open trade that is $5,100 down breaches a $5,000 limit at that moment, even if it would have recovered by the close. So does a profitable day that gives back too much: the limit is set from the morning balance, not from the day’s high.

Illustrative example: breached on a winning day

On a $100,000 2-Step account, a trader starts the day with a $102,000 balance, so the floor for the day is $97,000. They close two trades for +$1,500, then open a large position that moves $6,600 against them. Equity touches $96,900, below the $97,000 floor, and the account is closed, although the trader was in profit for the challenge and for most of the day.

When the day starts matters

FTMO resets at midnight Prague time. A trader in Asia or Africa is several hours ahead or behind, so “the day” on the firm’s clock may split your session in two. Positions held over the reset carry their open loss into the new day’s calculation, and the new limit is set from the balance alone. Write down the reset time in your own time zone before you start.

How to trade so it never triggers

  • Set your own daily stop at half the firm’s limit. On a $5,000 limit, stop trading for the day at $2,500 down.
  • Size every trade from the stop loss, so that the worst case on all open positions together stays well inside the day’s allowance.
  • Count open trades at their stop, not at their current price, when you decide whether you can open another.
  • Be careful around news and the weekly open, when prices can gap through a stop and take equity past the limit.
  • Know the reset time in your own time zone, and avoid carrying large open losses across it.

Our prop firm calculator works out the position size that keeps one stopped-out trade inside your daily limit.

The daily loss limit is not a target to trade up to. Traders who treat 5 per cent as their budget for the day are the ones who hit it. Treat it as a wall a long way behind your own stop.
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Daily limits at other firms

Firm and planDaily loss limitHow it works
FundedNext Stellar 2-Step5% of initial balanceIncludes realised and unrealised P&L, swap and commission; resets 0:00 server time
FundedNext Stellar 1-Step3%Same basis
FundedNext Stellar Lite4%Same basis
FundedNext Stellar InstantNone—
Topstep $50K / $100K / $150K$1,000 / $2,000 / $3,000On Live accounts, breaching deactivates the account for that day

Hard and soft daily limits

A hard daily limit ends the account when breached, as on FTMO’s challenges. A soft limit pauses trading for the rest of the session and lets you return the next day; FundedNext describes its Rapid and Direct futures limits this way. A soft limit is more forgiving, but it should be treated like a hard one, because the maximum loss limit beneath it is final.

Setting your own daily stop

  1. Take the firm’s daily limit in money terms, for example $5,000 on a $100,000 account.
  2. Halve it for your own stop: $2,500.
  3. Divide by your risk per trade to see how many losses that allows: at $500, five.
  4. Stop trading for the day when you reach it, without exception.
Illustrative example: the stop that saved the account

A trader with a $2,500 personal stop loses $2,600 by midday on a choppy session and stops. The afternoon brings a sharp reversal that would have caught their next two setups. The firm’s $5,000 limit was never in reach.

Key terms

The Daily Loss Limit: The Rule That Fails Most Traders: Key terms. Daily reset: The time each day when the limit is recalculated; Equity: Balance plus open profit or loss; Hard limit: Ends the account when breached; Soft limit: Pauses trading for the session when breached
The Daily Loss Limit: The Rule That Fails Most Traders: Key terms: the figures from this section at a glance.
TermMeaning
Daily resetThe time each day when the limit is recalculated
EquityBalance plus open profit or loss
Hard limitEnds the account when breached
Soft limitPauses trading for the session when breached

The daily limit works alongside these rules and habits.

Cite this guide

FX Recap, "The Daily Loss Limit: The Rule That Fails Most Traders", updated 14 October 2026, https://fxrecap.com/prop-trading/daily-loss-limit-explained

Free to quote with a link. Journalists: data and comment in our press room.

Frequently asked

What is a daily loss limit in prop trading?

It is the most your account may lose in a single trading day before it is closed. At FTMO it is 5 per cent of the starting account on the 2-Step Challenge and 3 per cent on the 1-Step, reset at midnight Central European time.

Does the daily loss limit include open trades?

At FTMO, yes. The limit is set from your balance at the daily reset, and your equity, including the profit or loss on open trades, must not fall below it. An open trade can breach the limit even if you would have closed it for a smaller loss later.

Does the daily loss limit grow with profit?

At FTMO, no. The daily amount is a fixed share of the starting account, so on a $100,000 2-Step account it stays $5,000 a day however much you have made. The starting point for each day moves with your balance.

How do I avoid breaking the daily loss limit?

Set your own daily stop well inside the firm's limit, size every trade from its stop loss, count open trades at their stop when you consider adding more, and take extra care around news and market gaps.

What is FundedNext's daily loss limit?

5 per cent of the initial balance on Stellar 2-Step, 3 per cent on 1-Step, 4 per cent on Lite and none on Instant, including realised and unrealised P&L, swaps and commission, reset at midnight server time.

What is a soft daily loss limit?

A limit that pauses trading for the rest of the session instead of failing the account. Some futures plans use it; the maximum loss limit still applies.