Daily Equity Cap: The Underrated Rule That Saves Prop-Firm Challenges

Daily Equity Cap: The Underrated Rule That Saves Prop-Firm Challenges

10 July 2025, 17:00
Diego Arribas Lopez
0
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Most traders fail FTMO before hitting the 10 % overall drawdown. The real killer? A single red day that breaks the 5 % daily limit. Let’s fix that.

1 — Why “One Bad Day” Wipes Out 90 % of Applicants

The funded-account game isn’t about chasing a 10 % target; it’s about surviving today.
Break the 5 % daily rule and your $ 625 fee evaporates—no appeal, no refund.

Month Equity curve if you cap daily loss at 4 % Equity curve if you don’t
Week 1 ▲ smooth rise ▲ ▲ ▼ account closed
Week 4 steady grind to +9 % ✖ challenge failed (week 1)

(Imagine a subtle graphic here showing the smooth vs. fatal drop.)


2 — The Psychology Behind Self-Destruction

Loss aversion + sunk-cost fallacy = toxic cocktail:

  1. Trader hits –3 % day-loss.
  2. “Just one more lot to claw back.”
  3. Equity slips to –5.01 % → Challenge failed.
  4. Rage-reentry on a new account with bigger lot size.

3 — What Exactly Is a Daily Equity Cap?

  • Definition: An automatic shut-off that stops the EA (or trader) the moment floating equity drops a set percentage.
  • Difference from an SL: Works at the account level, not per trade.
  • Sweet spot for prop firms: 3 – 4 % — leaves headroom under the 5 % rule.

Progress-bar bias: Each day you stay inside the 5 % band moves you one box closer to funding.


4 — Implementing the Cap Manually vs. Automatically

Method Pros Cons
Manual check No extra code Human error, time zone mismatch
MT5 “Stop-If-Day-Equity ≤ X %” script Simple, free Requires VPS, resets daily
EA with built-in cap Zero monitoring, instant compliance Needs reliable code

5 — Case Example: DoIt GBP Master with Built-In Cap

Live proof: MyFxBook account shows < 12 % max drawdown and never breaches 5 % daily on GBPUSD—even through CPI spikes.

Why?

  • Fixed-lot, multi-leg logic (no martingale)
  • ATR trailing cuts losers early
  • DailyLossLimitPercent parameter = 4 % by default
  • EA auto-pauses and resumes next session—no revenge trades

“I passed a 10 k FTMO on attempt #1 by letting the EA shut itself off. Zero temptation to ‘win it back’.” — S. Jensen


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Read the pilar guide Prop-Firm Friendly EA Strategy That Passed Live FTMO Challenges for portfolio sizing and mindset.


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6 — 60-Second Setup Guide

  1. Download FREE Demo in MT5 Strategy Tester
    https://www.mql5.com/en/market/product/130050
  2. Set DailyLossLimitPercent = 4.0
  3. Forward-test one week on micro-lot
  4. Launch your 10 k or 100 k challenge only after equity curve survives five trading days

7 — Common Pitfalls & Quick Fixes

Pitfall Fix
Moving the cap mid-day Lock parameters until end of session
Ignoring floating P/L Cap should read equity, not balance
Resetting EA after pause Accept the red day; start tomorrow

8 — Decision Time

Path Outcome
No cap One news spike → challenge dead
4 % equity cap Live to trade day #2, day #15… payout day

Ready to protect your funding fee?
Download the FREE Demo in MT5 →

Buy the full licence today for $ 599 and get DoIt Gold Guardian (worth $ 449) FREE — last units before price moves to $ 999.

Secure the downside first—profits take care of themselves.


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