Drawdown rules explained: daily loss vs maximum loss
Most failed challenges are not strategy failures — they are drawdown breaches. Here is exactly how the two loss limits are measured, with worked examples.
Two limits, two different jobs
Every prop firm evaluation has two loss limits. The maximum daily loss stops one bad day from ending your account; the maximum overall loss is a permanent floor for the life of the account. Breaching either — even for a moment on an open trade — closes the account.
How Capifront measures the maximum daily loss
On standard plans the daily limit is 5% (6% on Capifront Pro). Your equity — balance plus or minus any floating profit or loss on open positions — must never fall more than that amount below the account’s starting balance within a single trading day. The limit resets at the start of each trading day (server time).
Example: on a $100,000 account the daily limit is $5,000. If you start the day at $100,000 and an open trade is down $5,100 at any moment, the limit is breached even if the trade later recovers. Closed losses and floating losses count together.
How the maximum overall loss works
The overall limit is 10% (12% on Pro), also measured from the starting balance. On a $100,000 account your equity must never drop below $90,000, on any day. Because the floor is static — it does not move up as you make profit — every dollar you earn above the starting balance becomes extra buffer.
Example: you grow a $100,000 account to $106,000. The floor is still $90,000, so you now have $16,000 of room instead of $10,000.
Static vs trailing drawdown
Some firms use a trailing drawdown that follows your highest balance or equity upward. With a trailing limit, a $6,000 profit would also lift the floor by $6,000, so your buffer never grows. Capifront’s limits are static, measured from the starting balance — always check which model a firm uses before buying a challenge.
Balance-based vs equity-based limits
A balance-based limit only counts closed trades. An equity-based limit — the one Capifront uses — also counts open positions. That means a trade you hold through a sharp move can breach the limit before you close it. Size your positions so that your stop-loss, not the drawdown rule, is what ends a losing trade.
Practical rules to stay inside the limits
- Risk 0.5%–1% per trade. Five losses in a row at 1% is still only 5% — and you should have stopped long before that.
- Set a personal daily stop at half the limit. On a 5% rule, stop trading for the day at −2% to −2.5%.
- Count open risk. Three trades each risking 1% is 3% of exposure on the same day.
- Know the reset time. The daily limit resets on server time, not your local midnight.
- Use the dashboard. Rule usage is shown live, so you always know how much room is left.
For a full process, read how to pass a prop firm challenge and the binding trading rules.
Frequently asked questions
Does the daily loss limit include open trades?
Yes. At Capifront the daily limit is measured on equity, which includes floating profit and loss on open positions.
Is Capifront’s maximum drawdown trailing?
No. Both limits are measured from the account’s starting balance, so profits you make increase your buffer.
What happens if I breach a drawdown limit?
The account is closed. You can start a new evaluation at any time.
Ready to test your skills?
Compare every account size, profit target and risk limit before you start.
View challenges →Keep reading
All Capifront accounts are simulated demo accounts using virtual funds. This article is educational and is not financial or investment advice. Trading on margin carries a high level of risk.