What is Daily Loss Limit based on Initial Balance and how it works?

What is the Daily Loss Limit?

The Daily Loss Limit is the maximum amount of equity your account can lose in a single trading day. This includes unrealized profits and losses as well as swaps (overnight financing costs). For a Boost type challenge, the Daily Loss Limit is a fixed value set at 5% of your account’s initial (starting) balance.

How is the Daily Loss Limit calculated?

The Daily Loss Limit is always a fixed value of  5% from  the initial account balance. This limit is tracked from 17:00 EST each day. The Daily Max Loss Trigger level is calculated from the previous end-of-day Equity minus the Daily Loss Limit.

Important Notes:

• The Daily Loss Limit is calculated from the initial balance and is a static value for each day 
• Realized and unrealized profits and losses are included in the calculation, including swaps and dividends.
• If the account accumulates a loss that is equal or higher than the Daily Loss limit resulting Equity on the account reaching the Daily Loss Trigger level, the account will be breached 

Example 

Account Plan Boost with Virtual Capital of $100,000
Max Daily Loss Limit: $5,000 (5% of the starting balance)
Daily Loss Limit Trigger Level: $95,000 (95% of the starting balance)

Day 1:

• The Account registers an Unrealized loss: -$2,000
• Equity on the Account at End of Day 1: $98,000
  • Max Daily Loss Limit for next day: $5,000 (5% of the starting balance)
  • The Daily Loss Limit Trigger Level for the next day:  $93,000 ($98,000 - $5,000) 

Day 2:

• Unrealized loss grows to : -$7,100 (-$5,100 during the day)
• Equity on the account drops to: $92,900 and this is below the Daily Loss Trigger level and the account is breached.