Risk Management
Max Daily Loss
Definition
The maximum amount a trader can lose in a single trading day before the account is flagged or terminated.
How It Works
Max daily loss is a per-day risk limit, separate from the overall drawdown. A typical limit is 4-5% of the account size — so a $100K account can lose no more than $4K-$5K in one day.
This rule prevents catastrophic single-day losses and forces disciplined risk management. If breached, most firms immediately close all positions and may terminate the account.
Some firms measure this from the day's starting balance, others from the previous day's closing balance. Not all firms have a daily loss limit — some only enforce the overall max drawdown.
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