Prop Firm Daily Drawdown: How It Is Calculated (2026)

Prop firm daily drawdown is the most your account equity may fall within one trading day, measured from a floor the firm sets at its daily reset time: at most firms that floor is the balance at the reset (or the higher of balance and equity) minus a fixed daily percentage, and the account breaches the moment live equity touches it.

Three details cause most breaches: the floor can be set from balance, from the higher of balance or equity, or from futures session P&L; the number checked against it is usually equity, so open trades count; and each firm resets at a different time. This page covers all three with formulas and worked examples.

How is daily drawdown calculated?

The same 5% gives a different floor under each of the three bases.

1. Balance at the reset. The firm records your closed balance at the reset time. The daily amount is a fixed percentage of your initial account size.

Daily floor = Balance at reset − (Daily % × Initial balance)

FTMO Challenge 2-Step (Standard) states it this way: equity may not fall below the 00:00 CE(S)T balance minus 5% of initial capital. FundedNext Stellar 2-Step uses the same structure: a fixed dollar amount, 5% of the initial balance, below the day's starting balance, with closed and floating P&L both counting.

2. The higher of balance or equity at the reset. The firm looks at both numbers at the reset and anchors the floor to whichever is larger.

Daily floor = max(Balance at reset, Equity at reset) − Daily amount

Funding Pips 2 Step Standard, The5ers Hyper Growth, Blue Guardian 2 Step Standard and Maven Standard 1-Step use this basis. Firms word the daily amount differently (a percentage of the initial balance, or of the day's starting figure), so read your firm's own worked example before you rely on a number.

3. Futures session P&L. Futures evaluations such as the Topstep Trading Combine add up your net session P&L, realized and unrealized, and compare it with a dollar limit.

Breach when: Realized session P&L + Unrealized P&L ≤ −Daily limit

At Topstep the daily loss limit is an optional add-on that pauses the session rather than failing the account; the session resets at 5:00 PM CT. On a 50K Combine with the $1,000 add-on, −$600 realized plus −$450 open is −$1,050, past the line, so the session is paused.

Why do floating losses count if the floor is set from balance?

Because setting the floor and checking it are separate steps. The floor is set once, at the reset. After that, the firm compares your equity (balance plus open P&L) with it continuously.

FTMO's wording makes this explicit: it is equity that may not fall below the floor. FXIFY One Phase sets its limit 3% below the previous day's 5 PM EST balance and states it is breached on equity. So a trade that dips through the floor for a moment and then recovers to break-even can still fail the account.

It also means an open loss carried through the reset is already spent from the new day's allowance: the balance-based floor ignores it, but equity does not.

What time does the daily drawdown reset?

Published reset times for nine programs. The figures were checked against each firm's official rules on 26 September 2026; confirm on the firm's page before you trade, because programs change.

A reset tied to European or server time moves with daylight saving. 00:00 CE(S)T is 18:00 in New York for most of the year, but 19:00 in the few weeks when US and European clock changes are out of step. "Server time" means the clock in your MT5 terminal, not your local time.

The full rule set for twelve firms, including targets and max loss, is on the prop firm rules comparison.

Worked example: FTMO 2-Step $100K, a day that starts in profit

You trade an FTMO Challenge 2-Step (Standard) with $100,000 initial capital. After two good days, your balance at 00:00 CE(S)T is $102,000 and you have no open positions.

• Daily amount: 5% × $100,000 initial capital = $5,000
• Daily floor: $102,000 − $5,000 = $97,000
• Max loss floor (static): $100,000 − 10% × $100,000 = $100,000 − $10,000 = $90,000

The amount is not 5% of $102,000 ($5,100, floor $96,900). FTMO bases it on initial capital, so the floor rises with your balance but the allowance stays $5,000. The daily floor is the binding one, because $90,000 is further away.

Now change one thing. Suppose at 00:00 you were still holding a EUR/USD position showing −$800. The balance at the reset is still $102,000, so the floor is still $97,000. But equity is $102,000 − $800 = $101,200, and your real room is $101,200 − $97,000 = $4,200, not $5,000.

Worked example: the "higher of balance or equity" trap

You trade a Funding Pips 2 Step Standard with $100,000. At the reset (00:00 UTC+3) your balance is $100,000, and you are holding a long XAU/USD position showing +$1,500.

For this example, assume the 5% daily amount is taken from the $100,000 initial balance, so $5,000.

• Balance at reset: $100,000
• Equity at reset: $100,000 + $1,500 = $101,500
• Higher of the two: $101,500
• Daily floor: $101,500 − $5,000 = $96,500

The next morning, gold reverses. Track equity against that floor:

• Trade back to break-even: equity $100,000. Room left: $100,000 − $96,500 = $3,500. You have lost $1,500 of today's allowance without closing anything at a loss.
• Trade at −$3,500 from entry: equity $100,000 − $3,500 = $96,500. That is the floor. The account is breached, even though the trade never lost more than $3,500 and the closed balance never went below $100,000.

On a balance basis the floor would be $100,000 − $5,000 = $95,000, and the trade could fall $5,000 from entry.

If your firm takes the percentage of the day's starting figure instead, the floor is $101,500 − (5% × $101,500) = $101,500 − $5,075 = $96,425, nearly the same trap. Under a "higher of" basis, a floating profit held through the reset raises the floor. Close or reduce before the reset, or tighten the stop so a full reversal cannot reach the new floor.

Worked example: The5ers soft breach vs hard breach

The5ers Hyper Growth and Pro Growth both have a 3% daily loss on the higher of balance or equity, reset at 00:00 MT5 server time, and a 6% static max loss. Take a $20,000 account starting the day flat, so balance and equity are both $20,000.

• Daily amount: 3% × $20,000 = $600
• Daily floor: $20,000 − $600 = $19,400
• Max loss floor (static, 6% of the initial size): $20,000 − $1,200 = $18,800

You buy 0.30 lots of XAU/USD. Gold moves $100 per lot per $1.00, so this position moves 0.30 × $100 = $30 per $1.00. A $20.00 drop costs 20 × $30 = $600, which takes equity to $19,400, the daily floor.

• Hyper Growth: the daily limit closes your trades and disables the account until the next day. It does not fail it. You return tomorrow with a balance of about $19,400 and $19,400 − $18,800 = $600 left before the max loss.
• Pro Growth: hitting the daily limit terminates the account.

Same trade, different outcome. Even the soft version used half the account's total loss allowance in one day.

Daily loss vs max loss: which one breaches you?

Every account has two floors: the daily floor, which resets each day, and the max loss floor, which covers the life of the account. Your effective floor is the higher of the two.

Suppose your FTMO 2-Step $100K has had a bad week and the balance at 00:00 is $93,000:

• Daily floor: $93,000 − $5,000 = $88,000
• Max loss floor: $90,000
• Effective floor: $90,000. Room today: $93,000 − $90,000 = $3,000, not $5,000.

Max loss itself comes in four types:

• Static: a fixed level below the initial balance that never moves. FTMO 2-Step: $90,000 on $100,000.
• Trailing: follows a high-water mark. Maven Standard 1-Step trails the highest equity watermark. FXIFY One Phase and E8 One trail the highest closed balance and lock at the starting balance (FXIFY One Phase locks at +6% or the first payout).
• End-of-day trailing: moves up only with the balance recorded at the daily reset. FTMO 1-Step and the Topstep Trading Combine work this way.
• Intraday trailing: follows the peak in real time, including unrealized P&L. Apex's Intraday Trailing Drawdown evaluation is the example.

The prop firm rules comparison lists the max loss type for each program.

Worked example: the FTMO 1-Step ratchet

FTMO Challenge 1-Step has a 3% daily loss from the 00:00 CE(S)T balance and an end-of-day trailing max loss: the highest 00:00 balance of any previous day (or initial capital, if higher) minus 10% of initial capital. It only ratchets up.

On $100,000, 10% of initial capital is $10,000 and 3% is $3,000.

On day 3 the max loss floor stays at $93,000 because it never moves down, so your distance to it is $101,000 − $93,000 = $8,000, not $10,000. Intraday equity peaks do not move it; only 00:00 balances count.

How much room do I have left today?

1. Find the effective floor: the higher of today's daily floor and the max loss floor.
2. Start from equity, not balance: room = current equity − effective floor.
3. Subtract what is already at risk: for each open position, the loss if its stop is hit, measured from the current price.
4. Subtract a buffer for spread, slippage, commission and swap. The buffer is your own choice; size it from what your fills have looked like.
5. What remains is the most the new trade may lose at its stop. Use your normal per-trade risk if it fits, the smaller number if it does not.

Example. FTMO 2-Step $100K. Balance at 00:00 was $100,000, so the daily floor is $95,000. You closed two losers this morning for −$2,200, and you hold one EUR/USD position of 1.00 lot with its stop 20 pips away.

• Equity (EUR/USD trade at break-even): $100,000 − $2,200 = $97,800
• Room to the floor: $97,800 − $95,000 = $2,800
• Open risk: 20 pips × $10 per pip × 1.00 lot = $200
• Buffer you chose: $300
• Available for the next trade: $2,800 − $200 − $300 = $2,300

Your plan says 1% of $100,000, which is $1,000. That fits inside $2,300, so you size for $1,000. The setup is USD/JPY at 150.00 with a 30-pip stop:

• Pip value per lot: 1,000 JPY ÷ 150.00 = about $6.67
• Loss per lot at the stop: 30 × $6.67 = $200.10
• Size: $1,000 ÷ $200.10 = 4.997 lots, rounded down to 4.99 lots
• Check: 4.99 × $200.10 = $998.50, inside the $1,000 plan and the $2,300 room

The lot size calculator does the conversion for each instrument, including USD/JPY where the pip value moves with the rate. The firm pages, such as the FTMO calculator, the Funding Pips calculator and the The5ers calculator, start from that firm's rules. The calculators work without an account. For the general arithmetic of fixed-fractional sizing, see trading risk management.

How do traders breach the daily limit without noticing?

Most breaches come from the gap between what the trader watches and what the firm measures.

• Holding positions over the reset. Under a balance basis, a floating loss at the reset eats into tomorrow. Under a "higher of" basis, a floating profit at the reset raises the floor. Both are invisible if you only watch your closed balance.
• Swap and commission. They reduce equity like any loss. Many brokers charge a triple swap on one weekday night to cover the weekend; check which night on your account.
• Gaps over news and the weekend. A stop is an order, not a promise of price. Over high-impact news or a weekend open, the fill can be well beyond the stop, and the loss counts in full. FTMO's Standard funded accounts must close before the weekend and may not trade the 2 minutes around restricted news. Check the economic calendar before holding through a release.
• Correlated positions. Long EUR/USD and long GBP/USD are largely one bet against the US dollar. Long NAS100 and long US30 often move together in a sell-off. Add their stop losses together when you compute open risk, as if they were one trade.
• Losing streaks inside one day. Five losses at 1% is 5%, the whole FTMO 2-Step daily allowance. Decide in advance how many losses end your day.

Track daily room in a journal

The figure that matters each morning is the distance from equity to the effective floor. Writing it next to each trade shows which days came close to a breach and why: a held position, a news fill, correlated trades.

The Fips trading journal records trades with their risk and notes. MT4 and MT5 accounts sync through a read-only investor password, so Fips can read history but never place or close a trade. Prop rule tracking inside the journal is coming soon. Fips is in private beta with access by waitlist.

Frequently asked questions

Does daily drawdown include floating losses?

At most forex prop firms, yes. The floor is compared with equity, which includes open P&L. FTMO's rule says equity may not fall below the daily floor, FundedNext counts closed and floating P&L, and FXIFY One Phase is breached on equity. A trade that dips through the floor and recovers can still fail the account.

What time does the FTMO daily loss reset?

At 00:00 CE(S)T, Central European time, which follows daylight saving. That is 18:00 New York time for most of the year. The floor for the new day is set from your balance at that moment.

Is daily drawdown based on balance or equity?

The floor is set from balance at FTMO, FundedNext Stellar 2-Step and E8 One, and from the higher of balance or equity at Funding Pips, The5ers, Blue Guardian and Maven. Either way, equity is what gets checked against it.

Is the daily loss a percentage of my current balance or the initial balance?

At FTMO and FundedNext Stellar 2-Step it is a percentage of the initial balance, so the dollar amount stays the same as the account grows. On a $100,000 FTMO 2-Step it is $5,000 every day, whether you start the day at $96,000 or $104,000. Other firms word it differently, so check the worked example on your firm's rules page.

What happens if I hit the daily drawdown limit?

On most programs in the table above it is a hard breach and the account fails. The5ers Hyper Growth is the exception: trades are closed and the account is disabled until the next day. Topstep's optional daily limit pauses the session. A soft breach is still a real loss and uses up part of your max loss.

Do swaps and commissions count toward the daily loss?

Yes. They are debited from the account and reduce equity like any other loss. Include them in the buffer you keep between a full stop-out and the floor.