Should a daily loss limit be measured on balance or equity?
Quick answer
Equity is more protective because it includes open losses: a trader cannot sit on a large floating loss without consequence. Balance-based limits only count closed trades. Most firms measure the limit on equity, and the best approach measures equity against a day reference that does not reward overnight floating losses.
Detailed answer
The difference:
- Balance-based: a trader can be far below the limit in floating loss and still be within the rule until they close.
- Equity-based: the account breaches as soon as equity crosses the limit, open trades included.
The day's reference matters as much as the measure. PropExecutor measures daily loss on equity, against the higher of balance and equity at the start of each UTC day, so it is never looser than a pure equity rule.
Worked example
A $50,000 account opens the day at $50,000 with a 5% limit. The trader opens a position that falls $3,000 into loss and holds it. On a balance-based rule, nothing happens until the trade closes. On an equity-based rule, the account is $3,000 into its $2,500 limit and has already breached.
Tell traders clearly
Traders coming from balance-based firms often assume open losses do not count. State plainly that they do.
PropExecutor team · Updated
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