What is End of Day Drawdown?

📌 PROP FIRM TRADING TIPS

What is End of Day Drawdown?

With firms that have end of day drawdowns, your max daily loss will reset at the end of each day.

EXAMPLE 1: Let's say you're participating in a trading challenge with a starting account balance of $250,000. Your max daily loss will reset at the end of each day. Initially, your max daily loss is set at 4%, which is $10,000. 💼

If you end the day with a $15,000 closed profit, your account balance will now be $265,000. Consequently, your max daily loss for the next day will be recalculated based on this new balance, which is $255,000. Your account will be breached if your equity falls below $255,000 at any point throughout the day. ⚠️

EXAMPLE 2: Imagine your account is in a $100,000 challenge, and you have an open position that is $7,000 in profit when the new day starts at 5pm EST. Following the reset, the drawdown would be calculated as $107,000 - $4,000 = $103,000. If your equity dips below $103,000 at any point during the day, you have violated the max daily drawdown. 📉