The maximum amount a trader is allowed to lose in a single trading day. Exceeding this limit typically disqualifies the trader. There are different types of loss limits, so it is important to understand the type that applies to a chosen plan.
Staying within the daily loss limit is critical for maintaining the account. Exceeding this limit results in immediate disqualification, even if the trader was previously profitable.
A trader has a $2,500 daily loss limit. If they lose $2,300 in the morning session, they must trade very cautiously or stop for the day to avoid violating the rule.
The number of phases a trader must complete to qualify for a funded account. Each phase typically includes meeting profit targets while adhering to risk rules.
The initial amount of capital allocated to a trading account in an evaluation or funded account.
The specific profit amount a trader must achieve to pass an evaluation or progress to a higher account level.
The maximum permissible loss from the starting balance or peak balance. Breaching the drawdown limit ends the evaluation or funded account.
The profit cushion above the starting balance, which traders must maintain to stay compliant or qualify for payouts.