How to stay within your daily drawdown limit
Staying within daily drawdown means tracking your account’s actual measurement, considering open positions and preparing to stop. Looking only at closed trades can give an incomplete picture.
In this guide
Know exactly what the limit measures
“Daily drawdown” does not describe one universal formula. Identify the reference capital, treatment of floating results, costs and reset time. A decline from the session’s peak is not necessarily the same as a loss from its opening balance.
If you have not established the method, start with defining your daily loss limit. This guide focuses on applying an already-defined rule during a session.
Check remaining headroom before an entry
A simplified example uses a fixed €10,000 reference and an illustrative 2% cap, or €200. With a measured loss of €150, only €50 remains before the cap. A new position with an estimated €60 loss does not fit that headroom, even though the limit has not yet been reached.
This is neither a recommended threshold nor an execution guarantee. Consider risk from positions already open and costs not yet included. Available headroom is not an invitation to use all of it.
Four things to monitor
- Realised results from closed trades.
- Floating results from positions still open.
- Costs, without counting amounts already included in net results twice.
- Time: the measurement period, reset and actual time zone.
Realised profits do not make a remaining position risk-free. Market moves can change the monitored measurement. Check what happens if you carry positions through the reset.
Prepare an action, not just an alert
A notification informs you; it does not make a decision for you. Define when new entries stop and how remaining positions and orders will be handled. Prepare this before the session, not when you are hoping to recover the last loss.
SentinelleTrader’s dashboard shows protection status and configured limits. During an active lock, new positions are closed until the planned reset. Automatic closing remains subject to execution conditions and does not guarantee a final result exactly equal to the cap.
Compare your prop firm’s own rule
FTMO’s documentation illustrates why equity, commissions, swaps and the reset reference can matter in daily-loss calculations. Read the current terms of your exact programme rather than transferring another offer’s formula or percentage.
Protection software does not guarantee passing a challenge. Check calculation alignment, account permissions and connection status. The automation guide covers these checks.
After a trigger
Record the measured value at the trigger, time, positions involved and any execution difference. Leave limits unchanged during the event. The review should explain how the rule worked, not justify restarting immediately.
Complement this with an SL-count limit and explore the SentinelleTrader demonstration.
