Equity vs balance daily-loss rules: why your open trade already counts
9 November 2026, 11:29
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Two traders can sit on the same account, at the same moment, with the same trades, and have very different amounts of room left before a prop daily-loss breach. The difference is not the strategy. It is how the firm measures the limit.
ONE ACCOUNT, ONE MOMENT
- Account size: $100,000. Daily loss limit: 5%, so $5,000.
- Yesterday you opened a trade and held it overnight. At the daily reset it was floating +$1,500. Balance $100,000, equity $101,500.
- Today you close two other trades for +$2,000. Balance is now $102,000.
- The overnight trade has turned against you and is now floating −$1,500. Equity is $100,500.
How much room do you have before a breach? It depends on the rule.
THREE RULES, THREE ANSWERS
A. Balance-based (closed trades only)
Floor = day's starting balance − limit = $100,000 − $5,000 = $95,000, checked against balance.
Balance $102,000 → $7,000 of room.
The open trade doesn't count until you close it. If you close it at −$1,500, room drops to $5,500.
B. Equity-based, from the day's starting balance
Same floor, $95,000, but checked against equity, so open trades count right now.
Equity $100,500 → $5,500 of room.
C. Equity-based, from the higher of balance or equity at the reset
Reference = max($100,000, $101,500) = $101,500. Floor = $101,500 − $5,000 = $96,500.
Equity $100,500 → $4,000 of room.
The overnight trade's +$1,500 raised your floor, then gave the profit back. You lost $1,500 of room without closing a single losing trade.
Summary:
- A. Balance: floor $95,000, room $7,000
- B. Equity, from starting balance: floor $95,000, room $5,500
- C. Equity, from higher of balance/equity: floor $96,500, room $4,000
Same trades. Room ranges from $7,000 to $4,000. A trader who assumes rule A on a rule C account thinks they can lose another 7% today. They can lose 4%.
WHAT THIS MEANS FOR YOUR SIZING
1. Find your firm's exact wording. Look for "equity", "balance", "whichever is higher" and when the daily reset happens (and in which time zone).
2. Count open trades as already lost for planning, unless your firm is strictly balance-based.
3. Be careful holding positions through the reset. Under rule C, a profitable overnight position raises tomorrow's floor. If it reverses, that room is gone.
4. Set your own stop before the firm's. Measure it the same way the firm does (equity, same reference) and leave a buffer for slippage on the final close, for example stop at 80% of the limit.
Your firm's rules page is the final authority. These numbers are planning arithmetic, not trading advice.
RUN IT FOR YOUR OWN RULES
The free planner works out your room under your firm's daily and trailing drawdown rules and shows every assumption. No account is needed:
If you want the limit enforced inside MT5 itself, so the terminal closes positions and stops new entries once you hit your number, Daily Loss Guardian is on the MQL5 Market.
Not sure which rule your firm uses? Post the wording in the comments and I'll work through it.
Trading involves risk. Past performance does not guarantee future results.
