One bad day: where your daily-loss line is, and how to enforce it in MT5 and MT4
A funded account can end on one bad day: a single session that breaks the daily-loss rule, whatever the strategy did the rest of the month. This post shows where that line is and how to enforce it on MetaTrader 5 and MetaTrader 4.
1. Where today's line is
The common rule: the daily limit is a percent of the starting balance, counted down from today's starting equity, and the max loss is a percent of the starting balance. Example: a $100,000 account with a 5% daily and a 10% max-loss rule.
- Daily line = today's starting equity 100,000 minus 5,000 = 95,000
- Max-loss line = 100,000 minus 10,000 = 90,000
- The higher line binds today: 95,000. With equity at 99,000 you have 4,000 of room left today.
Check how your own firm measures both lines (balance or equity, and at which server hour the day resets) before you rely on any number.
2. Why the guard must act before the line
Closing positions takes time and price keeps moving. A guard that acts exactly at the line will often finish below it. Setting the trip point about a fifth of the daily limit earlier leaves room for slippage and for the time the closes take:
| Your rule | Daily limit / buffer (%) | Max loss / buffer (%) |
|---|---|---|
| 5% daily, 10% max | 5 / 1 | 10 / 1 |
| 4% daily, 8% max | 4 / 0.8 | 8 / 1 |
| 3% daily, 6% max | 3 / 0.6 | 6 / 1 |
3. What no tool can do
No software protects you from a weekend or news gap, slippage, a broker that rejects a close, or a terminal that is switched off. Run the guard on a VPS and keep the terminal connected. Equity can end below the limit by the size of a gap.
4. The tool we built for this
Equity Guardian watches the equity of the whole account several times a second: every EA, every manual trade and every pending order. When equity reaches your daily or max-loss limit, it closes every position, deletes the pending orders and keeps the account flat, until the next trading day after a daily limit or until you reset it after a max-loss limit. It never opens a trade on a live account. It starts in monitor mode and prints WOULD TRIP lines with the limits in money before it closes anything. In one measurement on a prop-firm demo server, a forced trip left the account flat 688 ms later.
MT5: Equity Guardian for MT5 (listed as Account Guardian Equity Protector) · MT4: Equity Guardian for MT4
Not affiliated with any prop firm. Trading forex and CFDs carries a high risk of losing money. This post is general information, not advice.
