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Before you start
Two checks. Tick them as you go.
Words you'll see. Balance = closed trades only. Equity = balance plus or minus what your open trades are showing. Floor = the equity level you must not go below.
Guide · Prop firms · MetaTrader 5 · about 15 minutes
How prop-firm daily drawdown works.So a rule never surprises you.
Written by Dan Freeman · last checked
A prop-firm account usually has two loss limits: one for the day and one for the whole account. How each one is measured decides when you hit it. Every number below is a made-up example. Your firm's own rules page is the final word.
~15 minstart to finish
7 stepstick each one off
Examplesmade-up round numbers
Free toolPFX Equity Shield
✓
Nothing here touches your account.
This guide explains the rules. The last step shows how to set the same rules in the free PFX Equity Shield, on a demo first.
1
Two limits, not one
A daily limit and an overall limit.
- Daily loss limit: how much you may lose in one trading day. It starts again when the firm's day rolls over.
- Maximum drawdown: how far the whole account may fall. It does not reset each day.
- Example: a $100,000 account with a 5% daily limit and a 10% maximum. You may lose $5,000 in a day and $10,000 in total.
Break either one and most firms fail the account. Read both on your firm's rules page.
Not seeing it?
My firm only lists one limit. Some accounts have no daily limit, or no overall one. Use the limits your firm actually states.
The limit is in money, not percent. That is common. The idea is the same: work out the floor in money.
2
Balance or equity
What the day's starting point is.
- The daily floor is measured from a starting point: the day's starting balance, the starting equity, or the higher of the two.
- Example: you start the day at a $100,000 balance with a trade carried overnight showing +$1,200. Equity is $101,200.
- With a $5,000 limit, a balance basis puts the floor at $95,000. A higher-of-the-two basis puts it at $96,200: $1,200 less room than you might think.
An open loss counts the moment it shows. You do not have to close a trade for it to count against equity.
Not seeing it?
My firm doesn't say which basis it uses. Ask the firm. If you can't find out, plan for the strictest reading: the higher of the two.
3
When the firm's day starts
The firm's clock, not your chart's.
- The daily limit resets at the firm's day start. Some firms use 17:00 New York time, some 17:00 Chicago time, others midnight in their own time zone.
- Your MT5 chart's day starts at your broker's server midnight. That is often a different moment.
- Daylight saving moves clocks on different dates in the US, the UK and Europe, so the gap can change twice a year.
This is the mistake the PFX journal had to fix in its own prop panel: each prop rule now keeps the firm's day start, because counting the day from the wrong midnight gives the wrong daily figure.
Not seeing it?
My daily loss doesn't match the firm's dashboard. Check the day start first. A trade a few hours either side of the reset lands in a different day.
4
Static, trailing, end of day
Three ways the overall floor can move.
- Example: a $50,000 account with a $2,500 maximum. On day one your equity peaks at $51,800 during the day, and you end the day with a $51,000 balance.
- Static: the floor stays at $47,500, the start minus the limit. It never moves.
- Trailing: the floor follows your highest equity, open profit included. It rises to $49,300 and never falls back.
- End-of-day trailing: the floor follows your balance at the end of each day. It rises to $48,500.
Trailing is the strictest of the three: profit you give back still counts against you. Some firms stop the trail once the floor reaches the starting balance. Check yours.
Not seeing it?
My firm calls it something else. Look for whether the limit moves up as you profit, and whether it uses equity during the day or the balance at the day's end.
5
Payouts and new phases
Two things that change your numbers.
- A payout lowers your balance, but it is not a trading loss. Keep it apart from your results. The PFX journal shows payouts on their own line for this reason.
- A new phase or a new MT5 login usually starts from a fresh balance. Treat it as a new run, not a continuation.
- Ask your firm whether a payout moves your floor. Firms differ.
Mixing payouts or phases into one running total is the quickest way to misread how close you are to a limit.
Not seeing it?
My balance dropped after a payout and the floor looks closer. That may be correct for your firm. Check its rules on withdrawals.
6
What happens at the limit
The firm's lock, and your own one.
- Touch a firm's floor and the account is normally failed or closed. There is no second chance on that account.
- So set your own stop inside the firm's, with room to spare for slippage and spread.
- PFX Equity Shield does this on your MT5 account: at your limit it closes every trade and pending order, disarms the charts and locks the account. The lock survives a terminal restart. A daily lock lifts at the next daily reset.
Its optional HARD LOCKOUT refuses every manual clear until the next trading day. You can still remove the tool from the chart: it makes breaking your own rule slow and deliberate, not impossible.
Not seeing it?
The shield closed my trades before the firm's limit. That is the point of a margin. Check the shield's warning level and limits.
7
Set the same rules in Equity Shield
Match the tool to your firm.
- Account size: type the challenge size. Do not use 0 on a challenge: 0 measures from the balance the shield has seen, not the firm's starting balance.
- Drawdown type: Normal for a static limit, Trailing for a limit that follows your equity high. There is no separate end-of-day mode: Trailing follows the equity high, which is stricter, so it stops you earlier, never later.
- Daily baseline: Balance, Equity, or Higher of the two, to match step 2.
- Daily reset time in UTC: your firm's day start from step 3, written in UTC. Blank means broker midnight.
Full setup, step by step: Set up PFX Equity Shield for MetaTrader 5.
Try it on a demo account first, and watch the panel through one daily reset before you trust it on a challenge.
Not seeing it?
I can't find these settings. They are in the shield's first settings group, Equity protection. Update to the newest version from the MQL5 Market.
Your safety nets
Three things to keep in mind.
1
The firm decides
Your firm's rules and dashboard are the final word. Rules differ between firms and change over time.
2
Leave a margin
Set your own limit inside the firm's, never on the edge of it.
3
Demo first
Watch a tool through a full day, including the reset, on a demo before a real account.
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Prop-firm accounts
This guide explains common rule types. It does not describe any one firm's rules. Read your firm's rules page and ask the firm if anything is unclear.
Risk warning: Trading carries a high risk of loss and is not suitable for everyone. The examples are made up and are not any firm's rules. Equity Shield is a risk tool. It cannot guarantee any outcome. MetaTrader and MQL5 are trademarks of MetaQuotes Ltd.; PrecisionFX is not affiliated with or endorsed by MetaQuotes.