Prop firm challenges: how many of you failed because of the loss limits? - page 2

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Jason, that's the most common way challenges end, so you're in good company. What helped the traders I've talked to:

1. Write the limit down in money at the start of every day. 5% of what, exactly? On some firms it's 5% of the starting balance, on others it's 5% of the balance or equity at server midnight, whichever is higher. That changes the real number a lot after a winning day.

2. Set your own stop well before the firm's. If the firm stops you at -5%, you stop at -3.5% or -4%. The gap between the two is your buffer for slippage, spread and the trade you "just have to" take after two losses.

3. Count the open trades, not only the closed ones. Add up the loss of every open position if all stop losses were hit at once. If that number plus today's closed loss is over your own limit, the next trade waits.

Jevon, good point on gaps. One detail I'd add: on most prop firms the daily limit is checked against equity, floating P/L included, not only closed P/L. So a gap doesn't need to close the trade to fail the account. The floating loss alone can touch the limit, and a stop loss hit in a gap is filled as a market order at the next available price, not at the stop level. That's why sizing for the worst case, like you describe, matters more than the stop itself.

Konstantinos, congrats on getting through, a pass after several fails usually means something changed in the process. What was the main difference in the one you passed: smaller size, fewer trades per day, or a different way of handling the daily limit?

Amedeo, combined. The minus 17.6 R is the sum over all four index markets on the worst day of that month, about 35 trades a day in total, and I did not split it per market. That is the number the firm sees. The daily correlation between the markets was only moderate, 0.39 between DAX and Nasdaq, yet the red days were red nearly everywhere at once. The same replay also showed that 0.25 percent was still too much for the whole month, because the drawdown went past the 10 percent overall limit, so all four markets together would have needed about 0.15 percent per trade.

On the scaling, smooth. The multiplier is 1.0 at the equity high and falls linearly to 0.40 at an 8 percent drawdown, measured on equity including floating, so an open losing trade already shrinks the next one, and it comes back up by itself as equity recovers. The only step is the daily lock, straight to zero with everything closed.

Amedeo Nustriani:
How many of you have lost a prop firm challenge because of the loss limits (daily or maximum), and not because of the strategy?

And what would have helped you the most to pass? A clearer rule from the firm, an alert before reaching the limit, a fixed daily routine, smaller position sizes, or something else?

I am curious to hear different experiences.
What helps most is a number you can see at all times: remaining daily loss in money, computed from equity, not balance, and from the same day-start reference your firm uses. Write it to the chart with Comment() or a label, and send a push notification at, say, 50% and 75% of the limit. Next, list your worst realistic day, meaning every open position hitting its stop plus a gap, and size so that figure fits inside the limit. Split that budget per EA by magic number, so a grid or averaging system cannot spend the whole allowance. Flatten or hedge before rollover and major news if you hold large floating losses. Review the trades after each day: which EA used what share of the loss tells you what to size down.
Youness Kanbaou #:

Chris, “one number in money for all open positions” is the right way to see it, since the limit doesn’t care which symbol caused the loss.

One more thing I would put into that number: spread widening at rollover.

On many prop firms the daily limit resets around midnight server time, which is also when rollover happens and spreads widen. Floating P/L is calculated at the current bid/ask, so even without any price gap, a wider spread pushes the floating loss up on every open position right at the start of the new day. If the account is already close to the limit, that short spike alone can be enough to breach it.

At the weekend open it is usually worse, with thin liquidity on metals and indices.

So I would add a spread buffer on top of the gap buffer, or simply avoid holding through rollover when the room left is small.

Hi Youness,

the rollover spread i hadn't on my list. Makes sense though, the spike hits every open position at the same moment, and with a grid EA that can be a lot of positions.

@Jevon Naldo Yoshield at least at my firm it was not closed P/L. They counted equity, floating included. Thats why the gap hurt so much, the positions were still open.

Best regards
Chris

Thanks Timon-pascal, that answers it. 17.6 R combined across four markets, with only 0.39 correlation and still red almost everywhere on the worst day. That is what many people miss: correlation goes up exactly when it hurts.

Abdullah, thanks. A separate budget per EA, so one grid can’t spend the whole daily quota, is a very good way to look at it. The alert at 50% and 75% is simple but smart.

Chris, thanks for explaining how the day went with positions still open.

One question for Timon-pascal: did you pick the 0.15% per trade from that one replay month only, or did you also check it on other periods?

The question is, did you fail because of the loss limits, or did the loss limits expose a weakness in your strategy?

There's a big difference..

Prop firms are not designed to accommodate every trading strategy. You're operating under strict risk parameters, and your job as a trader is to adapt accordingly

If your strategy requires a 10% drawdown to recover and your prop firm only allows 5%, then you're trading with the wrong strategy for that environment. Simple as that

Personally, I don't believe alerts, smaller lot sizes, or a fixed daily routine will magically turn an unsuitable strategy into a profitable one

What matters is having a statistically proven edge, proper position sizing, a positive RRR, and a clear understanding of the firm's rules, including how drawdown is calculated

And one more thing: Passing The Challenge is ONE THING. Keeping the funded account and successfully withdrawing your profits is an ENTIRELY DIFFERENT BUSINESS!

That's where the real test begins

I'd add one practical step: record the reason for each failed challenge separately from the trading result.

Was it a planned loss within the strategy, an oversized position, several trades exposed to the same move, or trading again after the daily stop?

Those need different fixes. A reminder won't fix oversized exposure, and changing the entry strategy won't fix revenge trading.

Before another attempt, I'd replay the failed day using the exact firm's rules and a written personal stop. If the same decisions would still breach the limit, I'd change the process before paying for another challenge.

Alex Holloway #:
The question is, did you fail because of the loss limits, or did the loss limits expose a weakness in your strategy?

There's a big difference..

Prop firms are not designed to accommodate every trading strategy. You're operating under strict risk parameters, and your job as a trader is to adapt accordingly

If your strategy requires a 10% drawdown to recover and your prop firm only allows 5%, then you're trading with the wrong strategy for that environment. Simple as that

Personally, I don't believe alerts, smaller lot sizes, or a fixed daily routine will magically turn an unsuitable strategy into a profitable one

What matters is having a statistically proven edge, proper position sizing, a positive RRR, and a clear understanding of the firm's rules, including how drawdown is calculated

And one more thing: Passing The Challenge is ONE THING. Keeping the funded account and successfully withdrawing your profits is an ENTIRELY DIFFERENT BUSINESS!

That's where the real test begins
Agreed on the first part: no alert or routine turns a strategy without an edge into a profitable one. If a strategy needs 10% to breathe, a 5% firm is simply the wrong place for it.

Where I see it differently is the other side. Even a strategy with a real edge has losing streaks, and under a daily limit the order of the losses matters, not only the average. Five losses in a row at 1% is a normal day for many valid systems, and it is still a breach. So sizing against the daily limit doesn't fix a bad strategy, it keeps a good one alive long enough for the edge to show. You need both.

Fully agree on the funded stage. Consistency rules and payout conditions change the game again, so the risk plan has to be written for that phase too, not only for the challenge.

Chris, with a grid the rollover spike hits every open level at the same second. A quick number before midnight: total open lots × usual spread widening in points × point value. Does your grid keep adding levels during that spike, or does it have a time filter?

Muhammad, logging the reason separately from the result is a great habit. That list usually shows the problem faster than the equity curve.
Interesting question. From what I've seen while building and testing EAs, most "rule" failures aren't caused by a bad strategy. They're caused by position sizing that doesn't account for the worst case.
Typical patterns:
Several trades hit SL on the same day. Each trade risked 1%, but 4–5 correlated positions were open at once, so the real exposure was 4–5%.
Floating loss counts, not just closed loss. Many firms measure daily drawdown on equity. A trade that would have recovered still breaks the rule at its worst point.
Reset time confusion. The firm's day resets on its server time, not your local time.
Revenge trading after a loss. Trying to win the day back near the limit.
What would help most, in my opinion, in this order:
Smaller and capped size. Before every trade, check: if everything open hits SL right now, am I still under the daily limit with a buffer? If not, skip the trade.
A hard stop, not just an alert. An alert is easy to ignore in the moment. A tool that closes everything and blocks new trades at about 70–80% of the limit removes the decision.
A fixed routine. A set number of trades or a set risk per day, and stop after X losses.
Clearer rules from firms would help too, but you can't control that, and the three points above you can.
Curious whether others found the same: was it one big loss, or several small ones adding up on the same day?

Amedeo, that was one month, so the question is fair. I did run the long history afterwards on the six older setups across the same four indices, 11.4 years and about 66,500 trades. The worst single day in all of it was minus 17.4 R, so that August day was about as bad as a day got in eleven years. The overall limit was the harder constraint. Three quiet years from 2015 to 2017 produced a drawdown of 449 R without one terrible day in it, just a slow grind, and to keep the whole period inside 10 percent the raw book without any scaling would have needed about 0.07 percent per trade. So for me the worst day sets the daily cap and the grind sets the size. I also trust that long run less than the month, because my old backtest engine later turned out to book profits even on random data, which makes its drawdowns look smaller than they were. I never measured the correlation on red days separately, but the red days I checked were red almost everywhere at once, which fits what you say.

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