Daily Drawdown Explained: How the Prop Firm Daily Loss Limit Works
The daily drawdown is the rule that ends more challenges than any bad week. Here is exactly how Core Funded calculates it, with worked $100K examples.
The daily drawdown is the maximum amount your account may lose within a single trading day. At a prop firm it sits next to the overall drawdown as a second safety line: you can be well above your total loss limit and still lose the account because one day went too far. If you understand how the daily drawdown is calculated, when it resets and what counts toward it, you can size your trades so that a bad day stays a bad day and not the end of your challenge.
This guide explains the daily loss limit as Core Funded applies it, with the exact formula, the limits per account type and worked examples on a $100,000 account.
What a daily drawdown is
A daily drawdown (also called the maximum daily loss or daily loss limit) caps how much your equity may fall during one day. It is separate from the static drawdown, which is the maximum total loss over the whole life of the account.
Think of it as two floors under your account:
- The total loss floor is fixed at the start and never moves.
- The daily loss floor is recalculated every day at 00:00 UTC.
Whichever floor is higher at any moment is the one you have to respect. Touching either one stops the account.
Daily drawdown limits at Core Funded
Each account type has its own daily loss limit. The percentage is always taken from the original account balance, not from your current balance.
| Account type | Max. daily loss | Max. total loss (static) |
|---|---|---|
| Instant Funding | 3% | 5% |
| 1-Step Challenge | 3% | 6% |
| 2-Step Challenge | 5% | 8% |
| 2-Step FLEX | None | 12% |
| Pay After Pass, Step 1 | None | 8% |
| Pay After Pass, Funded | 3% | 6% |
On a $100,000 account this means a daily loss of $3,000 on an instant funded account or the 1-Step Challenge, and $5,000 on the 2-Step Challenge.
How the daily drawdown is calculated
Core Funded uses one formula for every account type that has a daily limit:
At 00:00 UTC we take the higher value of your account balance or your equity and subtract the fixed percentage of the original account balance.
Three terms matter here:
- Balance is your account value from closed trades.
- Equity is balance plus the result of your open positions.
- Original account balance is the size you bought, for example $100,000.
The result is your daily floor for that day. Your equity must not fall below it until the next reset at 00:00 UTC.
Unrealized losses count
The limit is checked against equity, so an open trade that is deep in the red counts the same as a closed loss. Closing a losing position does not make it worse, and holding it does not protect you. If equity touches the daily floor, the account is stopped immediately.
The reset is at 00:00 UTC
The trading day for this rule runs on UTC, not on your local time or the server time of your broker app. If you trade from Central Europe, midnight UTC is 01:00 or 02:00 local time depending on daylight saving time. Positions you hold over the reset are carried into the new day with their current equity.
Worked examples on a $100,000 account
Example 1: open profit at the reset (1-Step, 3%)
At 00:00 UTC your balance is $100,000 and you hold a trade that is $2,000 in profit. Your equity is $102,000, which is higher than your balance, so it becomes the base.
- Base: $102,000
- Daily loss: 3% of $100,000 = $3,000
- Daily floor: $102,000 − $3,000 = $99,000
If the open trade turns and equity drops from $102,000 to $99,000, you have hit the limit, even though your balance never went below the starting $100,000. This is the case that surprises traders most: open profit at midnight raises the floor for the next day.
Example 2: open loss at the reset (1-Step, 3%)
At 00:00 UTC your balance is $100,000 and an open trade is $2,000 in the red. Equity is $98,000. The balance is higher, so the balance is the base.
- Base: $100,000
- Daily floor: $100,000 − $3,000 = $97,000
The open loss already uses $2,000 of the distance to that floor. Equity is $98,000, so you have $1,000 of room left before the trade stops the account.
Example 3: a profitable account (2-Step, 5%)
You are in Phase 1 of the 2-Step Challenge and your equity at the reset is $103,000.
- Base: $103,000
- Daily loss: 5% of $100,000 = $5,000
- Daily floor: $103,000 − $5,000 = $98,000
Example 4: when the total loss floor is the tighter one
On the 2-Step Challenge the static total loss floor of a $100,000 account is $92,000. Say a few losing days have brought your balance to $94,000 at the reset.
- Daily floor: $94,000 − $5,000 = $89,000
- Total loss floor: $92,000
Here the daily floor is below the total loss floor, so the total loss floor is the one that applies. Your real room for the day is $2,000, not $5,000. After losses, always check both lines.
Trading a challenge without a daily drawdown
If your style involves holding positions through volatile sessions or scaling into a trade over several hours, a daily limit can stop you out of an idea that would have worked by the end of the week. For that reason Core Funded offers the 2-Step FLEX Challenge, which has no daily loss limit at all.
What FLEX changes compared with the standard 2-Step:
| Rule | 2-Step Standard | 2-Step FLEX |
|---|---|---|
| Profit target Phase 1 / Phase 2 | 10% / 5% | 10% / 5% |
| Max. daily loss | 5% | None |
| Max. total loss (static) | 8% | 12% |
| Account sizes | $5K to $500K | $5K to $100K |
| Price for $100K | 495€ | 745€ |
FLEX starts at 69€ for $5,000. The only loss line you have to watch is the static 12% total loss, which on $100,000 sits at $88,000 for the whole life of the account. Minimum trading days are 5 qualifying days, each with at least 0.5% profit.
The Pay After Pass model also has no daily loss limit in Step 1. Its funded stage uses a 3% daily limit.
How to stay inside the daily loss limit
None of this requires a special strategy. It comes down to sizing and a few habits.
Work out your daily room before the session
Write down your daily floor at the start of the day. On a $100,000 1-Step account with no open trades, that is $97,000. Every position you open should be sized so that your stop loss, together with all other open risk, cannot take equity below that number.
Risk per trade as a share of the daily limit
A simple approach: never let a single trade risk more than a fraction of the daily allowance. With a $3,000 daily limit and four planned trades, $500 to $750 of risk per trade leaves room for slippage and a fifth idea. The full limits for every model are listed in the trading rules.
Be careful with open profit at midnight
As example 1 showed, open profit at 00:00 UTC raises the next day's floor. If you plan to hold a winning trade overnight, consider moving the stop so that a full reversal cannot cost you more than the daily allowance measured from the new base.
Remember that every open position counts
The rule looks at equity across all open trades. Three correlated positions in EUR/USD, GBP/USD and AUD/USD behave like one big trade when the dollar moves. Count them together.
Daily drawdown vs. static drawdown
Both rules measure losses, but they answer different questions:
- The daily drawdown asks: how much did you lose since the last 00:00 UTC reset? It moves every day.
- The static drawdown asks: how far is equity below the original account size? It never moves. At Core Funded the total loss limit is static on every model and does not follow your profits upward.
On a $100,000 1-Step account the static floor is $94,000 forever, while the daily floor changes with your balance or equity at each reset. You can read more on the static drawdown page.
Questions and answers
What is a daily drawdown at a prop firm?
It is the maximum your account may lose within one trading day. At Core Funded it is calculated at 00:00 UTC as the higher of balance or equity, minus a fixed percentage of the original account balance.
How high is the daily loss limit at Core Funded?
3% on Instant Funding and the 1-Step Challenge, 5% on the 2-Step Challenge, and none on 2-Step FLEX. Pay After Pass has no daily limit in Step 1 and 3% on the funded stage.
When does the daily drawdown reset?
Every day at 00:00 UTC. The new floor is calculated from the higher of your balance or equity at that moment.
Do open trades count toward the daily drawdown?
Yes. The limit is checked against equity, which includes unrealized profits and losses of all open positions.
What happens if I breach the daily loss limit?
The account is stopped immediately. It does not matter whether the loss came from closed trades or from open positions.
Is there a prop firm challenge without a daily drawdown?
Yes. The 2-Step FLEX Challenge has no daily loss limit and a 12% static total loss instead of 8%. It is available from $5,000 to $100,000, starting at 69€.
Does the daily drawdown follow my profits?
The base can rise, because it uses the higher of balance or equity at each reset. The amount you may lose per day stays the same, since it is always a percentage of the original account balance.
