❓ What is Daily Drawdown?
Daily Drawdown is a risk management rule that limits the maximum amount you can lose within a single trading day. At FundedSquad, the Daily Drawdown is calculated based on the higher value of your account balance or account equity at the start of each new trading day.
📊 Daily Drawdown Limits by Account Type
Account Type | Daily Drawdown |
Instant Funded Accounts | 3% |
2 Step Fast Evaluation | 4% |
2 Step Squad Evaluation | 5% |
1 Step Evaluation | 3% |
⚙️ How Daily Drawdown Works
Calculation:
At 12:00 AM UTC (midnight), the system performs the daily reset and evaluates your account. It checks:Balance (closed trades only)
Equity (balance + floating profit/loss from open trades)
Whichever is higher at that moment becomes the new reference point for the next day’s drawdown calculation.
Violation Consequences:
Exceeding the daily drawdown results in account disqualification.
Daily drawdown violations are considered serious because they indicate excessive risk-taking.
Purpose:
Daily drawdown rules help traders stay disciplined, manage risk and ensure long term sustainability of their funded accounts.
🧮 Example Scenario
Account Type | 2 Step Fast Evaluation |
Daily Drawdown Limit | 4% |
Account Balance | $50,000 |
Equity at End of Day | $52,000 |
Example:
Account Balance: $50,000
Account Equity: $52,000 (Higher)
Threshold = ($52,000 × 4%) = $2,080
$52,000 - $2,080 = $49,920
Your balance/equity must stay above $49,920 for that day.