What is the Daily Loss Limit?
The Daily Loss Limit is a risk management tool that caps the amount you can lose in a single trading day. It’s designed to help you manage risk by preventing significant losses during particularly volatile trading sessions.
This rule is present on Starter Evaluation Accounts only and does not mean that breaching the Daily Loss Limit will cause your account to be disqualified.
How Does It Work?
The Daily Loss Limit sets a maximum amount of loss you can incur during a trading day. If your net losses reach this limit at any point, your account will be automatically liquidated for the rest of the day. This means all open positions will be closed, and you won’t be able to place new trades until the start of the next trading session.
Examples:
- On a $100K account with a $2,000 Daily Loss Limit, if your losses hit $2,000 during the day, your trades will be closed automatically, and trading will be paused until the next session.
- For a $150K account with a $3,000 limit, if losses reach $3,000, the same process will occur, protecting your account from further losses.
Why is the Daily Loss Limit Important?
- It enforces discipline by capping losses, helping you avoid the temptation to chase losses.
- It provides a safety net, ensuring that a bad day doesn’t turn into a catastrophic one.
- It gives you time to step back, review your trading strategy, and prepare for the next day.
What Happens If You Exceed the Daily Loss Limit?
If your losses exceed the Daily Loss Limit during the trading day, your positions will be closed, and your account will be locked from further trading until the next session begins. However, breaching this limit does not disqualify your account—it simply pauses your trading until the following day. This safeguard ensures that you don’t incur further losses and can return with a clear strategy the next day.
Monitoring Your Daily Loss Limit:
You can easily monitor your Daily Loss Limit via your Trader Dashboard, where you’ll see real-time updates on your current P&L. This keeps you informed and helps you manage your trading activities within safe limits.
By following the Daily Loss Limit, you protect your capital, maintain control over your trading, and ensure that you stay in the game for the long term.