Daily Loss Limits: End-of-Day vs Intraday
A 5% daily loss limit sounds self-explanatory. It isn’t. The difference between “measured at close” and “measured at any moment” is the difference between a rule that breathes and a rule that strangles.
End-of-day daily loss
Your loss for the day is measured against the previous day’s closing balance, checked when the market day ends.
- An intraday drawdown that recovers before close doesn’t count.
- A position that closes down more than the limit does.
Effect: you can trade through intraday volatility as long as you close the day above the line. Forgiving for most styles.
Intraday daily loss
Your loss is measured at any moment, including the peak-to-trough of a single position.
- A floating loss that touches the limit, even briefly, even if it recovers, blows the account.
Effect: brutal during news and high-volatility sessions. One bad fill can end the day.
Real-world examples
| Scenario | End-of-day (5%) | Intraday (5%) |
|---|---|---|
| Down 4% midday, recovers to −1% at close | Pass | Pass |
| Down 6% midday, closes −2% | Pass | Fail, touched the line |
| Up 3% at noon, down 4% from the day’s peak at close | Depends on close | Fail |
The gotcha
Firms rarely advertise which model they use with the words “end-of-day” or “intraday”, you have to read the calculation clause. Same percentage, completely different risk profile. This is a top-three reason traders buy the wrong challenge.