Prop firm daily drawdown explained: equity, balance and reset times

Prop firm daily drawdown is the most a challenge or funded account may lose in one trading day, measured from a line the firm sets at its daily reset: usually the day’s starting balance minus a percentage of the initial balance. At FTMO, FundedNext and BrightFunded, as of 1 October 2026, open trades count against that line while they float, along with swaps and commissions, and one dip below it breaches the account even if the trades recover.

Example numbers below are illustrative; your firm’s current page is the rule.

Two limits: daily loss and maximum loss

Every program checked here has two loss rules:

• The daily loss limit caps the loss within one trading day, as the firm defines the day.
• The maximum loss (or max drawdown) caps how far the account can fall overall.

A drawdown is a fall from a reference value, and firms differ mainly in the reference: the balance at the start of the day, the initial balance, or the highest balance or equity so far. In FTMO’s 2-Step, the daily limit is 5% and the maximum loss 10% of the initial capital, so one day can use at most half of the overall room.

At FTMO, both are checked on equity, which it defines as “Balance + Open Positions P/L ± Swaps – Commissions” (FTMO Trading Objectives). The balance changes when a trade closes. Equity moves with every tick.

How prop firm daily drawdown is calculated

The daily line has two parts: a reference value recorded at the firm’s reset time, and an allowance subtracted from it.

The reference value. At FTMO, it is the account balance recorded at 00:00 CE(S)T. BrightFunded uses “the highest value between your balance and equity” at its rollover (BrightFunded). The5ers’ 2-Step rules page takes the “previous day’s closing balance or equity balance, whichever is higher” (The5ers).

The allowance. FTMO, FundedNext and BrightFunded take a percentage of the initial balance: on a $100,000 account, 5% is $5,000 whatever today’s balance. The5ers’ 2-Step page takes 3% of the day’s reference value instead, so the allowance moves with the account: 3% of $110,000 is $3,300, not $3,000.

What counts. FTMO’s rule “includes both the results of closed positions and the floating P/L of open positions, as well as commissions and swaps” (FTMO Academy). FundedNext counts closed and running trades, and “swap charges, commissions, and fees are included” (FundedNext Help Center).

When it is checked. Continuously. FTMO says the rule “tracks the absolute lowest point your equity reaches during the day, even for a split second”, and that a violation stands “regardless of whether that trade later bounces back to a profit” (FTMO blog).

Trades held over the reset show why the reference value matters. With a floating loss, both methods set the line from the balance, so the new day starts with part of the allowance used; FTMO notes that “a position that was within the limit before midnight may exceed the limit after the reset if the floating loss is too large.” With a floating profit, a higher-of rule sets the line from equity, so giving that profit back uses the new day’s allowance.

In the last row, if the trade then closes at breakeven, equity is $104,000: $5,000 above the FTMO-style line, $3,500 above the higher-of line.

Worked example: a breach that recovers

The balance suggested $3,000 of room; the real room, on equity, was $500, and a one-minute spike took it. Spikes like that cluster around scheduled releases; see high-impact news.

Reset times, and why your bot’s day may differ

Every firm defines “the day” on its own clock:

• FTMO: the trading day runs from 00:00:00 to 23:59:59 CE(S)T, Central European (summer) time, and the daily limit is recalculated at 00:00 CE(S)T (FTMO Trading Objectives).
• FundedNext: the daily limit resets at 00:00 server time, which is GMT+3 during daylight saving time and GMT+2 the rest of the year (FundedNext Help Center).
• BrightFunded: the daily limit resets “between 11:30 PM – 11:59 PM CET”, and the firm says it is “not recommended to trade during this window” (BrightFunded Help Center).

Central European time is UTC+1 in winter and UTC+2 in summer. EU clocks move to summer time on the last Sunday of March and back on the last Sunday of October (European Commission), which in 2026 is 25 October.

MetaTrader 5 adds another clock: it shows quote times “according to the time zone of the broker’s trading server” (MetaTrader 5 help). The forex market hours tool shows the sessions in your own time zone.

The mismatch has a cost. PipWarden’s daily loss limit follows the UTC day, while in summer FTMO’s day starts at 22:00 UTC. Say a trade held over 22:00 UTC closes at 23:30 UTC with a loss of 1.5% of the account. The firm counts that loss in its new day; a UTC-based limit counts it in the old one and starts fresh at 00:00 UTC. Set at 5%, it would allow new trades until its own day lost 5%, on top of the 1.5% the firm has already counted.

The base can differ too. A tool taking 5% of the day’s starting balance allows more on an account that is up: on the $101,000 start above, it stops new trades at $95,950, below the firm’s $96,000 line. Both differences argue for a buffer.

Static, trailing and end-of-day trailing drawdown

The maximum loss comes in three common shapes. A trailing drawdown catches people out, because profit given back after a peak counts against it.

• Static. The line is the initial balance minus X% and never moves: $90,000 on a $100,000 account with a 10% limit. In FundedNext’s Stellar 2-Step example, after a $4,000 gain the account may lose $14,000, because the line is still $90,000 (FundedNext Help Center).
• Trailing (on equity). The line follows the highest equity reached, floating profit included. In BrightFunded’s 1-Step, the line on a $100,000 account starts at $94,000, rises to $98,000 when equity reaches $104,000, and locks at $100,000 once equity reaches $106,000 (BrightFunded 1-Step). A trade that floats up $4,000 and then closes at breakeven leaves the balance at $100,000 and the line at $98,000.
• End-of-day trailing. The line follows the highest balance recorded at the daily reset, so intraday highs do not raise it. FTMO’s 1-Step uses “the highest account balance achieved at 00:00 CE(S)T of any preceding trading day” (or the initial capital, if higher) minus 10% of the initial capital, and the limit “can only increase, but never decrease.” A balance of $104,000 at a reset lifts the line from $90,000 to $94,000.

Rules at a glance (checked on 1 October 2026)

Each firm runs several programs and changes its rules, so its current page is the rule, not this table. This is not a comparison or a recommendation.

All three firms test both limits against equity during the day (BrightFunded: “balance or equity” reaching the level “at any point”). At FundedNext, $2,000 of profit by noon makes that day’s allowance $7,000 on a $100,000 account.

Setting your own limit below the firm’s

The firm’s line is final. A limit of your own is where you stop opening trades, and the gap has to absorb what can still happen after that:

• Risk still open. Running trades can still lose the distance to their stops.
• Slippage and gaps. A stop is a trigger, not a promised price. Slippage around news, or a weekend gap, can fill it further away.
• Costs. Commissions and swaps count at the firms above.
• Clocks and bases. The day may start at another hour, and the percentage may be of another number.

As arithmetic only: against a firm limit of 5%, a personal daily loss limit of 3.5% leaves 1.5% for those. Whether that is enough depends on the risk per trade and on how many trades can be open at once.

One number does most of the work here, the open risk: what the open positions together would lose if every stop were hit from the current price. Before a new trade, room = equity − the firm’s line − open risk. The new trade fits only if its risk, plus something for slippage and costs, is smaller than that room.

The “Streak to limit” tab of the drawdown calculator counts how many full losses reach a limit. The position size calculator turns a risk amount into a lot size, and how to set a daily loss limit covers choosing the number.

Where a bot fits, and where it does not

The firm’s rules override any bot setting: the firm measures on its own server, with its own clock, reference value and definition of equity. A daily limit inside an Expert Advisor is a second line of defence on its own terms. It stops new trades; it cannot undo a dip that already crossed the firm’s line, and open trades run to their stops.

Firms also have rules for automated trading; prop firm EA rules covers what to look for.

PipWarden is not built for passing prop firm evaluations and does not know your firm’s rules. Its daily limit works like this:

• The setting is per account on the dashboard, under “Account limits”, as a percentage: 5% by default, anywhere from 0.5% to 50%.
• The day is the UTC day, and the percentage is of the balance at the start of that day (the balance minus the day’s closed trades), not of an initial balance.
• What counts is equity, so floating losses count.
• When it is checked: before every order, on the server when a signal is evaluated and again in the EA right before it opens a trade. Between signals, the EA checks about once a second and reports to the server every few seconds by default. A firm counts even a split-second dip.
• At the limit, new trades are refused. Once the breach is recorded (by the server when it sees it, or by the EA after it has lasted 10 seconds), the rest of the UTC day stays paused, even if equity recovers. A dip of a few seconds that breaches a firm’s rule may not pause the bot at all. Each skipped signal is logged with the reason “Daily loss limit reached”, and you get an alert by email or Telegram, depending on your alert settings.
• Open trades are not closed and keep their stops. The limit does not reserve room for the risk still open, so a day can end past it.
• There is no overall drawdown stop, so a firm’s maximum loss is yours to track.

The kill switch is separate: one click cancels pending entries and closes every position the bot opened, leaving manual trades alone. PipWarden runs in MT5 on a Windows PC or VPS, not on a phone. See the risk controls and how it works for the other checks before each order.

Forex/CFD trading is high risk. You can lose money. Not financial advice. Read the risk disclosure before trading.