Daily drawdown measured from equity, not balance: how it caught me

[FXS London Scalper]

On my first prop challenge I misunderstood the daily loss rule. I thought it was based on closed balance. It was based on the higher of balance or equity at the start of the day, and it counted floating losses.

The day it mattered: I had a trade running overnight in profit, about 0.8% up at the daily reset. The next morning it reversed. The daily limit was 5% from the start of day equity, which included that open profit. So the 0.8% of profit I gave back counted as a loss for the day, even though my balance hadn't changed.

I didn't breach, but I was much closer than I believed.

What I do now:

• No positions open across the daily reset.
• I use a small script that calculates the remaining daily allowance in real time from the firm's formula.
• I read the rules page twice and check the FAQ examples.

Every firm defines this a bit differently. Worth a read of the exact definition before starting.

[Amanhasnoname]

This one nearly got me too, on a two-step evaluation where I was holding a EURJPY swing through the server reset. I had something like 1.1% of open profit at midnight, and by mid-morning the trade had given most of it back and was slightly negative. In my head I had lost a little. According to the firm's dashboard I had used close to a third of my daily allowance before taking a single new trade.

The fix that worked for me was the same as yours, nothing open across the reset. If a position is still running at 23:45 server time, I either close it or cut it to a size where a full reversal would cost me well under one percent of the start-of-day number.

I also keep a small note on my monitor with the exact daily floor in dollars, recalculated each morning from the firm's formula. Seeing an actual figure rather than a percentage makes it much harder to drift towards it without noticing during a busy session.