Two rules that fail you for different reasons
Almost every prop firm enforces two separate risk rules, and traders constantly confuse them. A daily loss limit governs a single day. A maximum (or overall) drawdown governs the entire account. They are measured over different windows, reset on different schedules, and — critically — you can be perfectly inside one while breaching the other.
This guide maps the mechanics using each firm’s own published rule pages: how the limits are calculated, when they reset, whether they look at balance or equity, and whether the drawdown is static or trailing. Every numeric example below traces back to a primary source listed in the frontmatter. Rules change, so always confirm the current value on the firm’s own page before you trade. This article is educational and is not investment advice.
Daily loss limit: what it protects, and how it resets
A daily loss limit is a circuit breaker for a single session. It caps how much equity you can lose from the day’s starting point, and it resets at a fixed clock time — after which a fresh limit applies.
FTMO sets a Maximum Daily Loss on its evaluations and recalculates it every day at 00:00 CE(S)T. Per FTMO Academy, the limit for a given day equals the balance recorded at midnight minus a fixed percentage of the initial capital. On a 2-Step Challenge the daily figure is 5% of initial capital. So on a 200,000 account that shows a 204,000 balance at midnight, the floor for that day is 194,000 (204,000 minus 5% of 200,000). The 1-Step Challenge uses a tighter 3% daily loss with the same overall maximum — verify the current numbers against FTMO’s Trading Objectives page, since FTMO periodically revises them.
The reset time is not a footnote. If you hold a position across the daily reset, the new day’s lower limit can apply to a trade you opened under yesterday’s headroom. Topstep runs a separate intraday daily loss limit that resets at 5:00 PM CT, and per its help center the cap is 1,000 on the 50K account, 2,000 on the 100K, and 3,000 on the 150K — with both realized and unrealized P&L counting toward it.
Maximum drawdown: static vs trailing
The maximum drawdown — sometimes called the overall or maximum loss — is the floor your account may never fall below across its entire life. The decisive distinction is whether that floor is static or trailing.
A static (absolute) drawdown is a fixed dollar line that never moves. The5%ers High Stakes program uses a 10% absolute, balance-based maximum loss: a 50,000 account has a fixed 45,000 floor regardless of how much profit you bank on top. Because the floor never trails up, banking profit genuinely buys you breathing room. FTMO’s 2-Step Maximum Loss is also static at 10% of initial capital — on a 100,000 account, equity may never fall below 90,000 at any moment.
A trailing drawdown moves up as the account reaches new highs and then locks. Topstep’s Maximum Loss Limit is a trailing drawdown of 2,000 on the 50K account, 3,000 on the 100K, and 4,500 on the 150K. It trails upward based on end-of-day balance, never moves down, and locks permanently once it reaches the account’s starting balance. That lock matters: once a Topstep account’s drawdown reaches the starting balance, the floor stops rising and your buffer is fixed.
For a deeper side-by-side of these two models, see our guide on trailing vs static drawdown.
Balance vs equity: why floating P&L can breach you
The single most common surprise is that an open, unrealized loss can breach a limit before you ever close the trade. This comes down to whether the firm measures on balance or on equity.
FTMO is explicit that it measures on an equity basis: equity equals balance plus open positions’ P/L, adjusted for swaps and commissions, and that figure may not drop below the limit. FTMO Academy gives a clean worked example for the 10% Maximum Loss: a balance showing 92,000 looks safe against a 90,000 floor, but if open trades carry a 2,001 floating loss, equity equals 89,999 — which breaches the floor even though the closed balance never did. The same equity logic applies to the daily loss limit.
The5%ers, by contrast, measures its High Stakes maximum loss on balance (the absolute model), and evaluates the daily loss against the higher of the day’s starting equity or starting balance, at MT5 server time (GMT+2/+3). Knowing whether a firm uses balance or equity tells you immediately whether a deep but recovering open position can end your account.
Trailing drawdown in futures firms: end-of-day vs intraday
Among futures-style firms, the trailing drawdown comes in two flavors, and mistaking one for the other is a frequent cause of failure.
An intraday trailing drawdown follows the highest equity reached during the day, including unrealized gains. Apex Trader Funding uses exactly this: on a 50,000 account with a 2,500 max drawdown, an open trade that runs the balance up to 52,500 lifts the threshold to 50,000 in real time. Per Apex, the threshold stops moving once peak balance reaches Starting Balance plus Max Drawdown plus 100, after which it is fixed — and touching or falling below the threshold triggers automatic liquidation of all positions. The trap is that unrealized profit you never banked permanently raises your floor.
An end-of-day (EOD) trailing drawdown only adjusts on the daily close, and typically only on realized gains. MyFundedFutures does not enforce a separate daily loss limit on its 2026 plans; instead it relies on drawdown structures such as a 3% End-of-Day trailing drawdown (Core/Pro) that adjusts up only at the 5:00 PM EST daily close. Important nuance: an EOD trailing limit is still enforced in real time intraday — only its adjustment happens at the close. Confirm the current plan mechanics on the MyFundedFutures and Apex rule pages, and see our overview of futures prop firms for how these models differ from forex evaluations.
Worked example: a forex account under FTMO rules
Take a 100,000 FTMO 2-Step Challenge. The static Maximum Loss floor is 90,000 on equity, fixed for the life of the evaluation. The Maximum Daily Loss is 5% of initial capital, recalculated at 00:00 CE(S)T from the midnight balance.
- Day opens with balance 100,000. Daily floor for the day: 95,000.
- You trade to a closed balance of 92,000 and hold a position with a 2,001 floating loss. Equity is 89,999 — below the 90,000 overall floor. The account breaches on the Maximum Loss, regardless of the daily limit, because FTMO measures on equity.
- Had you instead closed flat at 96,000 and carried no open risk across midnight, the next day recalculates a fresh daily floor from the new midnight balance.
The lesson: the overall floor and the daily floor are checked simultaneously and independently, and unrealized losses count toward both.
Worked example: a futures account under Topstep and Apex rules
Now a 50K futures account, shown under each firm’s published mechanics.
Topstep (trailing, EOD-adjusted, locks at start balance):
- The Maximum Loss Limit starts at 48,000 (2,000 below the 50,000 start).
- After a 500 gain closes the day at 50,500, the MLL trails up to 48,500 and stays there even if the balance later falls back to 50,000.
- Separately, the intraday daily loss limit of 1,000 resets at 5:00 PM CT, and unrealized P&L counts against it in real time.
Apex (intraday trailing, follows unrealized highs, then locks):
- The threshold sits 2,500 below the peak. An open trade running the balance to 52,500 lifts the threshold to 50,000 immediately — on the unrealized high.
- The threshold locks once peak balance reaches Starting Balance plus Max Drawdown plus 100, then is fixed. Touch or breach it and all positions are auto-liquidated.
Side by side, Topstep’s drawdown only ratchets on the daily close, while Apex’s ratchets on every new intraday high — so the same trade can leave very different headroom depending on the firm. For a fuller comparison, see Apex vs MyFundedFutures.
How a breach triggers: liquidation, termination, reset timing
Three enforcement details decide whether a near-miss becomes a blown account:
- Real-time vs close-only monitoring. Even EOD-adjusted drawdowns are usually monitored live intraday; the close only changes where the floor sits next, not whether you can breach mid-session.
- Auto-liquidation vs soft fail. Apex auto-liquidates all positions the moment the threshold is touched. Other firms may mark the account failed without forcing the exit. Know which applies before you size a position.
- Reset timing. Daily limits reset at a firm-specific clock time (00:00 CE(S)T for FTMO, 5:00 PM CT for Topstep, 5:00 PM EST for MyFundedFutures’s EOD adjustment). Holding through the reset moves you onto a new day’s limit.
Common mistakes that end funded accounts
Across all five firms’ rule pages, the same failure patterns recur:
- Treating an EOD trailing limit as if it were only checked at the close. It is enforced in real time; only the adjustment waits for the close.
- Forgetting that floating profit raises an equity- or intraday-based floor — so giving back unbanked profit can breach you while your balance still looks fine.
- Holding a position across the daily reset, so the new, lower day-limit applies to a trade opened under yesterday’s headroom.
- Confusing balance-based and equity-based measurement and assuming a recovering open loss is safe.
- Reading a competitor’s numbers and assuming yours match. Confirm every figure on your own firm’s current page.
Quick comparison: firm-by-firm drawdown rules
| Firm | Daily loss limit | Max drawdown type | Basis | Notable mechanic |
|---|---|---|---|---|
| FTMO (2-Step) | 5% of initial capital, resets 00:00 CE(S)T | Static 10% | Equity | Floating loss counts; 1-Step uses 3% daily |
| The5%ers (High Stakes) | 5%, vs higher of start equity/balance | Static 10% absolute | Balance | Floor never trails up; MT5 server time |
| Topstep | 1,000 / 2,000 / 3,000 (50K/100K/150K), resets 5:00 PM CT | Trailing, EOD-adjusted | Realized + unrealized monitored | Locks at starting balance |
| Apex | None separate | Intraday trailing | Unrealized highs | Auto-liquidation; locks at start + DD + 100 |
| MyFundedFutures | None separate (2026 plans) | 3% EOD trailing (Core/Pro) | Realized at 5:00 PM EST close | Enforced live intraday |
Values reflect each firm’s published rule pages at the time of writing; confirm current figures before trading. For how we weigh these rules against payouts and track record, see our methodology and the 2026 ranking.
Bottom line
A daily loss limit and a maximum drawdown are not two sizes of the same rule — they protect the firm over different windows and break traders for different reasons. Before you risk a single contract, answer four questions on the firm’s own page: balance or equity, static or trailing, intraday or end-of-day, and where the drawdown locks. Get those four right and most “surprise” breaches stop being surprises.
We update this page as firms revise their rules. If you cite it, please link back to this page (PROP NAVI) as the source. This article is educational and is not investment advice.
Recommended firms with transparent rule pages
The firms below publish their drawdown mechanics in detail, which is exactly the transparency this article rewards (see methodology).
FTMO — clearly documented equity-based limits
FTMO Academy spells out its daily loss and maximum loss with worked examples, including how floating P/L is counted.
The5%ers — a static, balance-based model
The5%ers High Stakes uses an absolute 10% maximum loss that never trails up, which suits traders who want a fixed, predictable floor.
Fintokei — published objectives for evaluation traders
Fintokei documents its loss limits on its objectives pages for traders comparing evaluation structures.