{"id":80,"date":"2025-01-06T02:10:25","date_gmt":"2025-01-06T02:10:25","guid":{"rendered":"https:\/\/faq.wemastertrade.com\/?p=80"},"modified":"2026-01-14T08:47:30","modified_gmt":"2026-01-14T08:47:30","slug":"what-is-the-daily-loss-limit-and-what-happens-if-i-break-it","status":"publish","type":"post","link":"https:\/\/faq.wemastertrade.com\/en_gb\/what-is-the-daily-loss-limit-and-what-happens-if-i-break-it\/","title":{"rendered":"What is the Daily Loss Limit? and What Happens If I Break It?"},"content":{"rendered":"<h2 data-start=\"174\" data-end=\"225\"><strong data-start=\"177\" data-end=\"225\">1. How is the Maximum Daily Loss calculated?<\/strong><\/h2>\n<p data-start=\"227\" data-end=\"406\"><strong data-start=\"235\" data-end=\"282\">Fixed Daily Loss Value (depends on package)<\/strong> \u2014 The Max Daily Loss percentage (e.g., <strong data-start=\"322\" data-end=\"328\">2%<\/strong>, <strong data-start=\"330\" data-end=\"336\">4%<\/strong>, <strong data-start=\"338\" data-end=\"344\">5%<\/strong>) is fixed for the account package.<\/p>\n<p><strong data-start=\"385\" data-end=\"436\">Daily Loss Limit = InitialBalance \u00d7 DailyLoss%<\/strong> (this value does <strong data-start=\"454\" data-end=\"461\">not<\/strong> change during the day).<\/p>\n<p data-start=\"126\" data-end=\"263\"><strong data-start=\"62\" data-end=\"77\">For example<\/strong>, if your <strong data-start=\"87\" data-end=\"118\">Initial Balance is $100,000<\/strong> and the <strong>Dailyloss\u00a0is 4%<\/strong>, then:<\/p>\n<ul data-start=\"265\" data-end=\"312\">\n<li data-start=\"265\" data-end=\"312\">\n<p data-start=\"267\" data-end=\"312\"><strong data-start=\"267\" data-end=\"312\">Daily Loss Limit = $100,000 \u00d7 4% = $4,000<\/strong><span style=\"font-size: 14.4px;\">.<\/span><\/p>\n<\/li>\n<\/ul>\n<hr data-start=\"585\" data-end=\"588\" \/>\n<h2 data-start=\"731\" data-end=\"803\"><strong data-start=\"734\" data-end=\"803\">2. What are Prev Equity and Prev Balance, and why do they matter?<\/strong><\/h2>\n<p data-start=\"805\" data-end=\"873\">At the <strong data-start=\"812\" data-end=\"841\">start of each trading day<\/strong>, the system records two values:<\/p>\n<ul data-start=\"875\" data-end=\"1034\">\n<li data-start=\"875\" data-end=\"948\">\n<p data-start=\"877\" data-end=\"948\"><strong data-start=\"877\" data-end=\"894\">Prev Balance:<\/strong> Your account balance at the end of the previous day<\/p>\n<\/li>\n<li data-start=\"949\" data-end=\"1034\">\n<p data-start=\"951\" data-end=\"1034\"><strong data-start=\"951\" data-end=\"967\">Prev Equity:<\/strong> Your equity at the start of the day (including any open positions)<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1036\" data-end=\"1120\">If you hold positions overnight, <strong data-start=\"1070\" data-end=\"1119\">Prev Equity and Prev Balance may be different<\/strong>.<\/p>\n<p data-start=\"1122\" data-end=\"1239\">The system will always use the <strong data-start=\"1153\" data-end=\"1169\">higher value<\/strong> of the two as the reference for calculating the daily loss threshold.<br \/>\n<strong data-start=\"594\" data-end=\"638\"><br \/>\nExample 1: Equity is higher than Balance<\/strong><\/p>\n<ul data-start=\"640\" data-end=\"912\">\n<li data-start=\"640\" data-end=\"678\">\n<p data-start=\"642\" data-end=\"678\"><strong data-start=\"642\" data-end=\"666\">Prev Balance<\/strong>: $105,000<\/p>\n<\/li>\n<li data-start=\"679\" data-end=\"749\">\n<p data-start=\"681\" data-end=\"749\"><strong data-start=\"681\" data-end=\"704\">Prev Equity<\/strong>: $107,000<\/p>\n<\/li>\n<li data-start=\"751\" data-end=\"912\">\n<p data-start=\"753\" data-end=\"912\"><strong data-start=\"753\" data-end=\"777\">Daily Loss Threshold<\/strong>: <strong>$107,000<\/strong> \u2013 $4,000 = <strong data-start=\"799\" data-end=\"811\">$103,000<\/strong><br data-start=\"811\" data-end=\"814\" \/>\u2192 If your Equity drops below <strong data-start=\"843\" data-end=\"855\">$103,000<\/strong> at any time during the day, your account will be terminated<\/p>\n<\/li>\n<\/ul>\n<hr data-start=\"914\" data-end=\"917\" \/>\n<p data-start=\"919\" data-end=\"967\"><strong data-start=\"923\" data-end=\"967\">Example 2: Balance is higher than Equity<\/strong><\/p>\n<ul data-start=\"969\" data-end=\"1238\">\n<li data-start=\"969\" data-end=\"1007\">\n<p data-start=\"971\" data-end=\"1007\"><strong data-start=\"971\" data-end=\"995\">Prev Balance<\/strong>: $100,000<\/p>\n<\/li>\n<li data-start=\"1008\" data-end=\"1077\">\n<p data-start=\"1010\" data-end=\"1077\"><strong data-start=\"1010\" data-end=\"1033\">Prev Equity<\/strong>: $99,000<\/p>\n<\/li>\n<li data-start=\"1008\" data-end=\"1077\">\n<p data-start=\"1010\" data-end=\"1077\"><strong data-start=\"1081\" data-end=\"1105\">Daily Loss Threshold<\/strong>: <strong>$100,000<\/strong> \u2013 $4,000 = <strong data-start=\"1127\" data-end=\"1138\">$96,000<\/strong><br data-start=\"1138\" data-end=\"1141\" \/>\u2192 If your Equity drops below <strong data-start=\"1170\" data-end=\"1181\">$96,000<\/strong> at any time during the day, your account will be terminated.<\/p>\n<\/li>\n<\/ul>\n<div class=\"note\" style=\"background-color: #feedaf80; border-radius: 8px; padding: 16px 20px 20px; margin: 20px 0; border: 1px solid #fbc91633; text-align: center;\"><a style=\"color: #1a1a1a; font-weight: 900; text-decoration: underline;\" href=\"https:\/\/docs.google.com\/document\/d\/1n0g-uexuQrY0rNqokIcbGvnIy0gNcpMMfBmuDDUVNE0\/edit\" target=\"_blank\" rel=\"noopener\">Learn More Examples of This Rule Here<\/a><\/div>\n<p><strong>WHAT HAPPENS IF I BREAK THE DAILY LOSS RULE?<\/strong><\/p>\n<p>\u200bThe account will be automatically liquidated for the remainder of the trading day until the market is closed on the trading day if the Daily Loss was reached or surpassed for that trading day. You CAN NOT resume trading since it is a rule violation. You need to buy a new package to start again<\/p>\n<p>A market order is sent to close any open positions by the auto liquidation mechanism when a Loss Limit threshold is reached. This can mean that the trader&#8217;s P&amp;L ends up over the Loss Limit threshold, which would mean that the Real Loss is more than the Daily Loss Limit, depending on where the market was fluctuating. If the trader&#8217;s Net P&amp;L does, in fact, &#8220;hit and exceed&#8221; the Daily Loss Limit, then the auto liquidation, even with the ending P&amp;L, is unquestionably the result of that liquidation.<\/p>","protected":false},"excerpt":{"rendered":"<p>1. How is the Maximum Daily Loss calculated? Fixed Daily Loss Value (depends on package) \u2014 The Max Daily Loss percentage (e.g., 2%, 4%, 5%) is fixed for the account package. Daily Loss Limit = InitialBalance \u00d7 DailyLoss% (this value does not change during the day). For example, if your Initial Balance is $100,000 and [&#8230;]\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,6],"tags":[],"class_list":["post-80","post","type-post","status-publish","format-standard","hentry","category-instant-packages","category-trading-rules"],"_links":{"self":[{"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/posts\/80","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/comments?post=80"}],"version-history":[{"count":0,"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/posts\/80\/revisions"}],"wp:attachment":[{"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/media?parent=80"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/categories?post=80"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/faq.wemastertrade.com\/en_gb\/wp-json\/wp\/v2\/tags?post=80"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}