The Rule That Ends More Challenges Than Any Other
Ask a group of funded traders which rule caught them out first, and daily drawdown wins more often than max drawdown, consistency, or the profit target itself. It is the rule with the shortest fuse: it resets every calendar day, which sounds forgiving, but it also means a single bad session — not a bad week — is enough to end a challenge.
The daily drawdown rule exists to stop one catastrophic day from doing what a slow, steady losing streak would otherwise take weeks to do. It is a speed limit on losses, separate from the total loss limit.
How Daily Drawdown Is Calculated
Daily drawdown is almost always measured from either your starting balance of the day or your highest equity point reached that day (balance-based vs equity-based — check which your firm uses, since it changes how floating losses count). The limit itself is usually expressed as a fixed percentage of your initial account balance, recalculated as a dollar figure once at the start and then held static.
Worked example: $10,000 account, 5% daily drawdown
Your daily drawdown limit is $500. Your day starts at $10,000 equity.
| Time | Action | Equity | Day's loss so far | Status |
|---|---|---|---|---|
| 09:00 | Open 2 positions | $10,000 | $0 | OK |
| 10:15 | First trade stops out (-$220) | $9,780 | $220 | OK |
| 11:40 | Second trade stops out (-$180) | $9,600 | $400 | Warning zone |
| 12:30 | New trade opened, floating -$150 | $9,450 | $550 (floating) | BREACH |
Even though no position has been formally closed at a $550 loss, if the daily drawdown is measured on equity (floating P&L included), the breach happens the moment equity touches $9,500 — not when you click close. This is the detail that catches traders who think "I'll close it before it's official."
Daily Drawdown vs Max Drawdown — Not the Same Limit
Max drawdown is the total floor for the entire evaluation or funded account. Daily drawdown is a smaller, faster-resetting limit nested inside it. You can be nowhere near your max drawdown and still breach on a single day. For the full mechanics of how the total floor is calculated (static vs trailing), see drawdown explained.
Practical Ways to Respect the Daily Limit
Pre-calculate your worst-case scenario before the session opens. If you plan to have three positions open simultaneously, add up their stop-loss values. If that total exceeds 70–80% of your daily drawdown, you are oversized for the day, even if each individual trade looks reasonable in isolation.
Treat 70% of the daily limit as your real stop, not 100%. Spread widening, slippage on news, and a slow-to-trigger stop can all add a final few dollars of loss beyond your intended stop price. Leaving a buffer absorbs that without a breach.
Walk away after the limit is used, even if the market looks "about to turn." The daily drawdown resets at midnight (platform time) regardless of how the next hour plays out — there is no version of this rule where one more trade "fixes" the day.
Separate floating losses from realized losses in your head. If your firm counts equity (not just closed balance), a losing position left open is already counting against you even before you hit close.
How It Works on WICK FUNDED
WICK FUNDED's daily drawdown sits at 4% on the 1-Step and Instant Funded tracks, and 5% on the 2-Step track — calculated as a fixed dollar amount from your starting balance each day and shown live on the in-house terminal's risk monitor, so you always see your remaining buffer rather than having to calculate it by hand. On a $10,000 2-Step account, that is a $500 daily limit; on a $10,000 1-Step or Instant account, it is $400. These limits apply on top of the account's static max drawdown (6% on 1-Step, 10% on 2-Step, 5% on Instant Funded) — both must be respected simultaneously. Full numbers by track: /rules. Compare tracks: /trading-accounts/2-step-challenge.
FAQ
Does daily drawdown include open (floating) positions, or only closed trades? This varies by firm — always check whether your limit is equity-based or balance-based. Equity-based limits (which include floating losses) are stricter because an open losing trade already counts against the day, even before you close it.
What time does the daily drawdown reset? It resets at a fixed platform time, typically midnight in the firm's reference timezone — not your local midnight. Check your dashboard, not the clock on your wall.
If I breach daily drawdown, is the whole account over? Usually yes for that evaluation attempt — daily drawdown breaches are typically treated the same as max drawdown breaches: the account is closed. See /rules for exact breach consequences.
Can I avoid daily drawdown risk by just trading smaller? Smaller position sizing reduces the speed at which you approach the limit, but it does not remove the rule — it just gives you more trades' worth of room before a breach becomes possible.
Is daily drawdown the same across every account size? The percentage is usually constant across account sizes within a track, but the dollar figure scales with your starting balance — a $100,000 account at 5% has a much larger dollar cushion than a $10,000 account at the same percentage.
Simulated trading evaluation — no real funds are traded. Not financial advice.