[Forex Accounts] How to Calculate Daily Max Loss ?

[Forex Accounts] How to Calculate Daily Max Loss ?

🔍 What’s the Calculation?

The Daily Max Loss is calculated based on the higher of:

  1. End-of-day Balance (closed P&L only), or
  2. End-of-day Equity (balance + open/floating P&L)

The higher value is used as the reference for the next day’s Daily Drawdown limit.
Equity Higher Than Balance (Floating Profit)

Account Size: $100,000
Daily Max Loss: 5%
End of Day (EOD):

  • Balance: $100,000

  • Floating P&L: + $3,000

  • Equity: $103,000

Result:
Because equity is higher, the Daily Max Loss reference becomes $103,000.
Loss limit for the next day = $103,000 × 95% = $97,850

Balance Higher Than Equity (Floating Loss)

Account Size: $100,000
Daily Max Loss: 5%
End of Day (EOD):

  • Balance: $100,000

  • Floating P&L: – $2,000

  • Equity: $98,000

Result:
Because balance is higher, the Daily Max Loss reference stays at $100,000.
Loss limit for the next day = $100,000 × 95% = $95,000

No Open Trades (Balance = Equity)

Account Size: $100,000
Daily Max Loss: 5%
End of Day (EOD):

  • Balance: $100,000

  • Equity: $100,000

  • No floating P&L

Result:
Since balance = equity, the reference remains $100,000.
Loss limit for the next day = $95,000

📌 Practical Impact

  • Be aware that holding winning trades overnight tightens next day’s buffer.

  • No penalty for flat or losing positions.

  • Only affects traders who carry floating profits into end-of-day.

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