The Maximum Daily Loss is the amount you are allowed to lose every day. For the purpose of this rule, the higher value between equity and balance will be used. This rule is set as a % of the starting equity or balance of every day. The rule states that the equity of the day, which is the result of the currently floating PnL (Profit and Loss) in sum with all closed positions of that day must not hit the Maximum Daily Loss Limit. The daily maximum loss resets at 00:00 CE(S)T/server every day.
Example 1: Equity is higher than the balance at the start of the day
At the start of day 5, your account balance is $105.000 and your equity is $107.000. The Daily Loss Limit is 5% from the equity because it is higher:
Daily loss = $107.000 * 5% = $5.350 Daily Loss Limit.
This means your equity can’t go lower than: $107.000 – $5.350 Daily Loss Limit= $101.650 on day 5.
If your equity goes below $101.650 at any certain moment in time on day 5 your account will be closed.
Example 2: Balance is higher than the equity at the start of the day
At the start of day 7, your account balance is $100.000 and your equity is $99.000. The Daily Loss Limit is 5% of the balance because it is higher:
Daily loss = $100.000 * 5% = $5.000 Daily Loss Limit.
This means your equity can’t go lower than: $100.000 – $5.000 Daily Loss Limit= $95.000 on day 7.
If your equity goes below $95.000 at any certain moment in time on day 7 your account will be closed.