Daily loss limit: how to define your daily loss cap

Define the limit before the session

A daily loss limit tells you when you have decided to stop taking new positions. It can come from your own trading plan or a prop firm’s requirements.

The percentage alone is not enough. Check the calculation reference, floating losses, costs and reset time. Two limits displayed as 2% can measure different things. In a challenge, the terms of your exact programme remain the reference.

Understand the amount remaining

For illustration, 2% of a €10,000 reference amount is €200. After €150 of counted losses, the arithmetic leaves €50 before any additional costs. These figures are not recommended thresholds.

That amount does not automatically permit another trade. An open position, costs or your maximum loss count might already justify stopping. Use the risk budget calculator to work through your own figures.

1. Write down the exact rule. Identify its reference and which results are included in the loss calculation.
2. Monitor what remains. Review open positions and costs, not only trades already closed.
3. Prepare the stop and restart. Decide what action to take and check the reset time zone.

Enforce your stopping decision

SentinelleTrader lets you set a drawdown limit and maximum stop-loss count on your connected MT4/MT5 account. While a lock is active, new positions are automatically closed. See how the protection works to understand how it applies the rules you choose.

Connectivity and execution still matter. To distinguish the figures shown on a dashboard, read the daily drawdown guide. Do not assume a tool and your prop firm use the same calculation just because their percentages match.