Question 1

What is the difference between drawdown and a daily loss limit?

Accepted Answer

Drawdown is the total amount you can lose from a peak or starting balance over the whole evaluation. A daily loss limit is a separate cap on how much you can lose in one trading day. You can stay well above your total drawdown floor and still fail by tripping the daily limit on a single bad day.

Question 2

Why does trailing drawdown end so many accounts?

Accepted Answer

A trailing drawdown floor rises as your balance rises, so part of every new gain becomes locked in. If the floor trails your intraday equity, it can ratchet right up under an open position, then a normal pullback breaches it even though your closed balance still looks healthy.

Question 3

Does breaching a loss limit always end the account?

Accepted Answer

Not always. Some breaches are hard and end the evaluation immediately. Others are soft and only lock trading for the rest of the day. The firm's rule document is the only place that tells you which type a given limit is.