Daily loss limit
A daily loss limit is the largest loss a prop firm allows in one trading session, measured from the session's starting balance or equity; a soft limit closes the day's positions and stops trading until the next session, while a hard limit fails the account.
Senzoukria · Glossary · Updated September 2026
Anatomy of the rule
Four settings describe a daily loss limit completely, and firms differ on each: the amount, the basis, the consequence and the reset. The amount is a dollar figure or a percentage of the nominal account. The basis is closed balance or equity including open positions. The consequence is soft, meaning the day ends and the account continues, or hard, meaning the account fails. The reset is the time at which the day's reference is taken again, usually the session open or the settlement close.
| Amount | Fixed dollars, or a percentage of account size or of the previous close |
|---|---|
| Basis | Closed balance only, or equity with open positions marked |
| Consequence | Soft: positions flattened, trading locked until reset; hard: account failed |
| Reset | Session open, settlement close, or midnight in the firm's time zone |
Relation to the maximum drawdown
The daily limit and the maximum drawdown are independent rules on the same account. The daily limit resets each session and constrains the size of a single bad day; the drawdown never resets and constrains the cumulative loss from the peak. A trader can stay under the daily limit every day and still breach the drawdown over a losing week, and can breach a hard daily limit on a single day while the drawdown had room to spare.
In Senzoukria
Two different places hold a daily loss limit, and they serve different purposes. In the Prop firm rules form, the Daily loss limit block records the firm's rule: No daily limit, Soft (my day stops, my account survives) or Hard (my account fails), the Limit ($) amount, Measured on my closed balance or my equity, open positions included, and Resets at. The Prop firm simulation applies it when counting why accounts died, and the failure breakdown lists Daily loss limit as one cause among Max drawdown, Consistency, Position size, Time limit and Other rule.
Separately, the trading guards in Settings include the platform's own daily loss limit alongside a maximum quantity and a confirmation before sending; the Autopilot form has its own Max daily loss field. These are the user's guards, enforced by the application before an order leaves, and they are not a substitute for the firm's rule: setting them below the firm's limit is a way to stop before the firm does.
Common mistakes
- Ignoring the basis. An equity-based limit can be hit by an open loss that would have recovered by the close.
- Assuming the limit resets at midnight. Futures sessions open in the evening Chicago time; the firm's reset time may be the settlement close instead.
- Trading on after a soft breach. Some firms lock the account for the rest of the day; an order sent in that window is rejected or counted as a violation.
- Confusing a platform guard with the firm's rule. The application's daily loss limit is enforced locally and knows nothing of trades placed from another platform on the same account.
Related
- Trailing drawdown
- Unrealized drawdown
- Consistency rule
- Session Risk Budget indicator
- Orderflow software on prop firm accounts
This page in other languages
Frequently asked questions
- What happens when I hit a soft daily loss limit?
- Open positions are closed and no further trades are accepted until the reset time; the account survives and the drawdown is unchanged apart from the loss already taken. The firm's rulebook states whether a touch or only a crossing triggers the limit. A hard limit, by contrast, fails the account on the same event.
- Is the daily loss limit measured on the balance at the start of the day?
- At most firms yes, on the balance or equity recorded at the reset time, so the limit is a distance below that day's starting point. A few firms measure it as a percentage of the previous day's close. The value to enter in a rules model is the one written in the agreement, together with its basis and reset time.
- Should my platform guard match the firm's daily limit?
- It should sit below it. A guard set at the firm's exact figure stops orders only once the loss has already reached the level the firm enforces, leaving no margin for slippage or for a fill that arrives after the guard fired. Setting the guard lower means the day ends on the trader's terms, before the firm's rule is tested.