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Daily drawdown vs max drawdown
Two loss floors, measured differently: one resets every day, one never moves. Two worked examples show which one ends an account, and when.
Every evaluation has two drawdown limits, and equity must stay at or above both at every moment. They are easy to confuse because both are shares of the same starting balance. What differs is the point they are measured from.
The two floors
- Daily loss limit. Each day at 00:00 UTC the floor is set at the higher of balance and equity at 00:00 UTC, minus 4% of the starting balance on Classic 1-Step. It moves once a day, up or down with the account.
- Max loss limit. The floor is the starting balance minus 8%, and it is static: measured from the starting balance, it never moves.
The floor that binds is always the higher of the two. Early on, after a good day, that is the daily floor. After a run of losing days, the daily floor drops below the max-loss floor, and from then on the max-loss floor binds.
Example 1: a profit is not a cushion
Classic 1-Step 10K. Day 1 closes with a gain, so day 2 starts from a higher anchor and a higher daily floor. Day 2 then loses a little more than one day's room:
| Day | Result | Daily floor | Max-loss floor | Balance | Outcome |
|---|---|---|---|---|---|
| 1 | +$500.00 | $9,600.00 | $9,200.00 | $10,500.00 | Inside both floors |
| 2 | −$450.00 | $10,100.00 | $9,200.00 | $10,050.00 | Breach: daily loss |
A day's loss is measured from that day's anchor, not from the starting balance. An account can breach the daily limit while it is still in profit overall.
Example 2: when the max-loss floor takes over
The same account with three losing days, each smaller than one day's room:
| Day | Result | Daily floor | Max-loss floor | Balance | Outcome |
|---|---|---|---|---|---|
| 1 | −$350.00 | $9,600.00 | $9,200.00 | $9,650.00 | Inside both floors |
| 2 | −$350.00 | $9,250.00 | $9,200.00 | $9,300.00 | Inside both floors |
| 3 | −$150.00 | $8,900.00 | $9,200.00 | $9,150.00 | Breach: max loss |
Each losing day lowers the next anchor, and the daily floor with it. Once it drops below the max-loss floor, the max-loss floor is the one that ends the account, on a day that lost less than a full day's room.
What this means for a plan
- The room you have today is the distance from equity to the higher floor, not to the daily floor alone. The dashboard shows both distances.
- After a losing streak, the total room left, not the daily room, is the real limit.
- After a winning streak, the daily room is measured from the new high, so a large loss can breach while the account is still in profit.
On 2-Step the same logic applies with a daily limit of 5% and a max loss of 10%. The drawdown simulator runs any sequence of days through the same rules, for either model and any account size. Whether a max-loss floor trails your highs or stays fixed is a separate question, covered in static vs trailing drawdown.
Related
- Static vs trailing drawdownTwo accounts with the same max loss can have very different room. What static, end-of-day and intraday trailing drawdown mean, and which one we use.
- Daily loss limitThe daily loss limit is the most equity may fall in one trading day, measured from that day's anchor; crossing the floor ends the account.
- Max loss limitThe max loss limit is the most an account may lose in total; equity must stay above the starting balance minus that amount.
- Drawdown simulator