The daily drawdown is one of the most important rules to understand. Breaking it results in an immediate and automatic account closure. This guide explains exactly how it works, how it resets, how to calculate it yourself, and how to avoid breaching it.
What is the daily drawdown?
The daily drawdown is the maximum amount your account equity is allowed to drop within a single trading day. If your equity falls below this limit at any point during the day, your account is automatically closed and all open positions are immediately closed at market price.
The exact daily drawdown percentage depends on your product. You can find the specific percentage for your account in the product rules article for your challenge type.
When does the daily drawdown reset?
The daily drawdown resets every day at 00:00 UTC (midnight UTC). At that moment, the system takes a snapshot of your equity and balance, and a new daily limit is calculated for the next 24 hours.
If you are trading from a different timezone, keep in mind that your "trading day" for drawdown purposes may not match your local calendar day.
How is it calculated?
At 00:00 UTC, the system looks at two numbers: your equity and your balance. It takes whichever is HIGHER and calculates the daily drawdown limit from that number.
Formula:
Daily Drawdown Limit = Higher of (Equity or Balance) at 00:00 UTC × (1 minus daily drawdown percentage)
Example 1: Simple calculation (no open positions overnight)
Account size: $100,000
Daily drawdown: 5%
At 00:00 UTC your balance is $103,000 and you have no open positions, so equity is also $103,000.
Daily drawdown limit = $103,000 × 95% = $97,850
If your equity drops below $97,850 at any point during this trading day, your account is breached.
Example 2: When equity and balance are different
Account size: $100,000
Daily drawdown: 5%
At 00:00 UTC your balance is $100,000 but you have an open position in profit, so your equity is $103,000.
The system takes the HIGHER number, which is equity at $103,000.
Daily drawdown limit = $103,000 × 95% = $97,850
Important: Even though your balance is only $100,000, the limit is calculated from your equity because it was higher at the time of the reset.
Example 3: Open losing position at reset time
Account size: $100,000
Daily drawdown: 5%
At 00:00 UTC your balance is $105,000 but you are holding an open losing position, so your equity is $102,000.
The system takes the HIGHER number, which is balance at $105,000.
Daily drawdown limit = $105,000 × 95% = $99,750
This means even though your equity is already at $102,000, you only have $2,250 of room before breach ($102,000 minus $99,750). This catches many traders off guard.
Account size: $500,000
Daily drawdown: 3%
The trader has been profitable and grown the account equity to $611,490.50. At 00:00 UTC, starting equity is $611,490.50.
Daily drawdown limit = $611,490.50 × 97% = $593,145.79
During the day, the trader opens multiple XAUUSD positions. The floating loss pushes equity down to $592,176.50, which is below the $593,145.79 limit. The breach triggers automatically and all positions are closed at market price.
The difference between the limit and the breach point was only $969.29. This is why even small movements against you can trigger a daily drawdown breach when you are running large positions.
Common mistakes that lead to daily drawdown breaches
Opening too many positions at once: Each position adds to your total exposure. Five small positions can combine into one large drawdown if the market moves against all of them at the same time.
Not accounting for the reset calculation: If your equity was high at 00:00 UTC because of an open winning position, but that position reverses during the day, your drawdown room may be much smaller than you think.
Holding large positions through high-impact news: Events like NFP, CPI, or central bank decisions can cause rapid equity swings that breach your daily limit within seconds.
Forgetting about spread widening: During low liquidity periods (market open, late sessions), spreads can widen significantly. This temporarily reduces your equity and can push you below the daily limit.
How to check your daily drawdown in the dashboard
Log in to your dashboard at app.upcomers.com. Your current daily drawdown level is displayed directly on your account overview. You can see:
Your current daily drawdown limit.
How much room you have left before reaching the limit.
We recommend checking this before every trading session so you always know exactly how much room you have.
Quick summary
Daily drawdown is the maximum your equity can drop in a single trading day.
It resets every day at 00:00 UTC.
The limit is calculated from the HIGHER of your equity or balance at the time of reset.
Breaching the daily drawdown results in immediate and automatic account closure.
The exact percentage depends on your product. Check your product rules for the specific number.
Always check your current daily drawdown level in your dashboard before you start trading.
Small positions, stop losses, and awareness of news events are the best protection against accidentally breaching the daily drawdown.