Common questions about prop firm drawdown and how to stay compliant.
What is daily drawdown?+
Daily drawdown is the maximum loss allowed in a single trading day. Most prop firms set this at 5% of your account balance or equity. If your losses exceed this limit in one day, your challenge or funded account may be terminated.
What is the difference between daily and max drawdown?+
Daily drawdown resets every trading day and limits how much you can lose in a single session. Max drawdown is the total loss allowed from your starting balance across the entire challenge or funded period. Max drawdown is typically higher (8-12%) and tracks your highest account value to current.
How is drawdown actually calculated?+
Daily drawdown is calculated as a percentage of your starting balance or previous day's equity. Max drawdown is calculated from your peak account value. For example, on a $100K account with 5% daily drawdown, you cannot lose more than $5,000 in a single day. Most firms use a trailing max drawdown based on your highest recorded balance.
What happens if I hit the drawdown limit?+
If you exceed the daily or max drawdown limit during a challenge phase, the challenge is failed. On a funded account, most firms will terminate the account. Some firms offer a reset option for a reduced fee, but it varies by provider. The best approach is to automate protection so you never hit the limit in the first place.
Can I automate drawdown protection?+
Yes. Tools like our free MT5 prop firm panel can automatically monitor your daily loss and max drawdown in real time, blocking trades that would exceed your limits. This removes the emotional guesswork and ensures you stay compliant with your chosen firm's rules automatically.
What account sizes are supported?+
The calculator supports any account size from $5,000 to $200,000+, covering all common prop firm challenge levels. Simply enter your specific account size and the drawdown percentages set by your chosen firm to get instant limits.