A daily loss limit is a risk-limit mechanism designed to cap how much an account may lose within a single trading day, independent of the overall drawdown limit. Exceeding it ends the evaluation or funded period.

Three details determine whether a trader breaches it: the measurement basis (closed balance vs floating equity — equity-based limits count open losses in real time), the reference point (start-of-day balance vs start-of-day equity), and the reset time (commonly 00:00 server time or UTC). A position held through the reset can therefore start the new day already consuming the fresh limit.

For a worked example of daily loss limits in a live evaluation — including how to set a personal circuit breaker tighter than the program rule and how the limit interacts with position sizing and maximum drawdown — see How to Pass a 2-Step Evaluation. The position size calculator shows how many consecutive losses your daily limit absorbs at any risk setting.