Daily Equity Limitation Guide

Introduction: The Illusion of the "$100,000 Account"

The single biggest reason traders fail proprietary firm evaluations or lose funded accounts is a fundamental misunderstanding of their  real capital.

When a proprietary firm allocates a  $100,000 account with a  10% maximum drawdown rule, you do not actually have $100,000 to trade with. The firm will immediately revoke the account the moment your equity touches $90,000.

• Your true risk capital is exactly $10,000.

• The remaining $90,000 is merely artificial margin provided by the firm to allow you to open leveraged positions.

Traditional trading robots fail in this environment because their position-sizing formulas look at the headline balance ($100,000). As a result, they calculate lot sizes that are  10 times too large for your actual risk capital. A normal, healthy market fluctuation that would cause a standard 2% drawdown on a real cash account ends up causing a fatal 20% drawdown relative to your allowable buffer, blowing the funded account in hours.

The  Proprietary Firm Compliance Suite solves this dilemma. Through  Virtualised Capital, it separates your trading logic from the nominal broker balance, forcing the algorithm to treat your allowable loss buffer as your true total account balance.

In-Depth Parameter Breakdown

Here is an exhaustive breakdown of every setting inside the compliance suite and how each one affects your account.

1. Enable Virtualised Capital (Prop Firm Environment)

• What it is: The master activation switch for virtual risk allocation.

• How it works:

  • When set to  false, the Expert Advisor behaves like a standard retail bot, sizing trades against the full broker balance (e.g., $100,000).

  • When set to  true, the algorithm ignores the raw balance. All lot sizing calculations, drawdown checks, and recovery mechanics are recalculated against your  virtual drawdown buffer.

2. Virtualisation Protocol (Dynamic Target vs. Static Buffer)

• What it is: Determines how the algorithm manages your risk capital as profits accumulate.

• The Two Options:

  • Dynamic Buffer (Scales with Profit): Your working capital expands as you make money. For example, if you start with a $10,000 loss buffer on a $100,000 account and gain $2,000, your buffer grows to $12,000. The algorithm recognizes this wider safety cushion and allows position sizing to scale up gently to accelerate phase completion.

  • Static Buffer (Stable, Fixed Reserve): Locks your virtual capital to a fixed dollar amount regardless of profits. If you make $3,000, the EA keeps calculating risk as if you still have only your original buffer. This is the optimal setting for traders who want  zero compounding and completely flat, predictable risk throughout an evaluation.

3. Dynamic: Allocated Funded Account Size

• What it is: The baseline nominal account size assigned by your prop firm (e.g., 100,000.0, 50,000.0, or 25,000.0).
• How it works: This figure serves as the permanent anchor point for the percentage calculations. Even as your balance fluctuates with daily trading, this baseline remains stable, allowing the algorithm to always calculate your distance from the original account-size baseline.

4. Dynamic: Maximum Permitted Drawdown Threshold (%)

• What it is: The overall account survival floor enforced by your prop firm’s rules.
• How it works: This value is entered as the survival floor percentage:
  • If your firm allows a 10% maximum overall drawdown, set this to 90.0 (meaning the account fails if equity drops to 90% of the starting capital).
  • If your firm allows an 8% maximum overall drawdown, set this to 92.0.

The algorithm multiplies the allocated account size ($100,000) by 90.0%, resulting in a $90,000 survival floor. It then subtracts this level from your current equity to establish your exact liquid buffer ($10,000).

If your equity approaches $90,000, the EA treats the account as having reached its minimum survival threshold and stops opening new trades.

5. Static: Absolute Drawdown Buffer / Safety Net ($)

• What it is: The dollar-denominated buffer used when the  Virtualisation Protocol is set to  Static Buffer.

• How it works: Instead of percentage calculations, you define the exact dollar amount of risk capital you want the bot to manage.

6. Enable Daily Equity Lock (Prop Firm Rule Enforcement)

• What it is: The master switch for the automated intraday circuit breaker.

• How it works: Most evaluation programs enforce a strict  5% daily loss limit. Breaching this rule by even one cent results in immediate disqualification. When this parameter is active, the engine monitors realized closed trades and active floating equity tick-by-tick. If intraday limits are reached, it closes all positions immediately and halts all execution until 00:00 server midnight.

7. Daily Profit Ceiling (% to Auto-Halt Trading)

• What it is: A daily profit target designed to eliminate overtrading.

• How it works: When set to  1.0, the EA tracks combined net profit from 00:00 server time. The moment net intraday earnings reach  +1.0% of the starting day balance:

  1. The orchestrator liquidates every open basket across all quantitative engines.

  2. It cancels pending orders and locks the system in an idle state.

  3. The on-chart dashboard switches to a gold  ● TARGET REACHED indicator.

  4. Your daily gains are safely banked, and market exposure drops to zero until the next session.

8. Daily Drawdown Floor (% to Auto-Halt Trading)

• What it is: An automated emergency stop that shields the account from daily breach rules.

• How it works: If set to  4.0, the system continuously adds closed intraday losses to active floating losses. If total negative performance reaches  -4.0% of the day’s starting balance, the EA executes an emergency liquidation of all positions and shuts down until 00:00 server midnight.

The Buffer Strategy: Why Set 4.0% Instead of 5.0%?

Proprietary firms typically fail accounts at a hard 5.0% daily threshold.  Never set your software limit to 5.0%.

During volatile economic releases, market liquidity thins out. If the algorithm initiates an emergency close during high volatility:

• Spreads can widen dramatically.

• Slippage on market orders can cause fills several points past your intended exit price.

By setting your  Daily Drawdown Floor to 4.0%, you build in an automatic  1.0% safety cushion. Even if execution slippage costs an extra 0.3% during liquidation, your total realized loss stays at -4.3%, keeping you well clear of the firm's hard 5.0% rule.

How Virtual Capital Recalibrates Lot Sizing

By filtering through the virtual buffer, position sizing is automatically reduced by a factor of ten, matching your true risk allowance.

Recommended Configurations for Funded Accounts

Key Operational Rules

1. Let the Midnight Reset Work: The daily protector synchronizes with your broker's server clock (TimeCurrent()). The starting baseline resets automatically every night at 00:00 server time.

2. Never Close Trades Manually: Closing individual tickets from a mobile terminal corrupts the mathematical pairing of the recovery engine. Trust the automated exit logic and the Daily Equity Controller to handle closures systematically.

3. Keep Your VPS Active 24/7: The daily protection calculations require continuous uptime. Ensure your MetaTrader 5 terminal remains connected to an uninterrupted, low-latency VPS.