The daily loss limit is the session-level risk control that determines how much you can lose within a single trading day on a prop firm account. Breach it and the trading day ends. Most prop firms suspend new position entries for the remainder of the calendar day when the daily limit is hit. Some close the account entirely.
Understanding exactly how the daily limit is calculated, when it resets, and how it interacts with the maximum drawdown rule changes how you structure your risk from session to session.
Highlights of this article
- The daily loss limit caps the maximum loss allowed in a single calendar day, measured from the day's opening balance
- It resets at midnight UTC (or the firm's defined calendar reset time) at the start of each new trading day
- Hitting the daily limit does not always close the account; it suspends trading for the remainder of that day
- The daily limit and the maximum drawdown are two separate rules operating simultaneously; both must be respected at all times
- On all Velotrade challenges, the daily loss limit is 3% of the initial account balance, fixed for the entire evaluation
- Setting a personal daily stop below the official limit is the most effective way to protect a funded account from involuntary session closure
What is the daily loss limit?
In a crypto prop firm evaluation, the daily loss limit defines the maximum net loss allowed in a single trading session. If your account is down by more than the daily limit at any point during that trading day, the firm's risk system triggers and trading is suspended until the calendar day resets.
The daily loss limit is a separate, session-level control that sits on top of the maximum drawdown rule. A trader can be well within the maximum drawdown buffer and still hit the daily limit on a bad session. The two rules address different risk horizons: the daily limit controls single-session exposure, while the maximum drawdown controls cumulative account risk.
Most crypto prop firms define the daily loss limit as a fixed percentage of either the initial account balance or the opening balance at the start of each day. The method matters: a limit based on the initial balance stays the same in dollar terms throughout the evaluation, while a limit based on the daily opening balance changes as the account grows or shrinks.
How the daily limit is calculated
The calculation method determines the dollar value you are working with each session.
Fixed initial balance method: The daily limit is a percentage of the account's starting balance at activation. On a $5,000 account with a 3% daily limit, the dollar limit is $150 every day, regardless of whether the account has grown to $5,500 or fallen to $4,900.
Opening balance method: The daily limit recalculates at the start of each new calendar day based on the account's opening balance. On a $5,000 account that has grown to $5,400, a 3% daily limit from the opening balance gives a limit of $162 for that session.
Velotrade uses the fixed initial balance method. On all Velotrade challenges, the daily loss limit is 3% of the initial account balance, set at account activation and applied as a fixed dollar amount throughout the evaluation. A $5,000 account has a $150 daily limit on every session, from day one to the last.
The practical difference: as the account grows, the fixed initial-balance limit becomes proportionally smaller relative to equity. A trader who has grown a $5,000 account to $6,000 has a $1,000 buffer to the maximum drawdown floor, but still has only a $150 daily session limit. The daily limit does not scale with account growth.
When the daily limit resets
The daily loss limit resets at the start of each new calendar day. The specific reset time varies by firm. Common reset times are:
| Reset time | Notes |
|---|---|
| 00:00 UTC | Most common; aligns with the international date change |
| 00:00 EST / 05:00 UTC | Used by some US-focused firms |
| 00:00 server time | Depends on the firm's server location |
Always confirm the reset time with the specific firm. For prop firms that allow weekend trading, the daily limit applies on Saturday and Sunday as well. There is no pause in the daily limit clock during weekends or low-liquidity overnight periods.
For Velotrade, the daily limit resets at the start of each UTC calendar day. A session that started on Monday and ran past midnight UTC belongs to Tuesday's daily limit once the reset point passes.
How open positions interact with the daily limit
The daily loss limit is measured from the day's opening balance. This has a direct implication for traders who hold positions overnight: the P&L of those positions at the start of the new day becomes the baseline for the daily limit calculation.
Example:
A trader opens a $5,000 account and enters a BTC long position on Monday afternoon. By midnight UTC, the position is down $60 unrealised. On Tuesday morning, the opening balance for the daily limit is $4,940, not $5,000.
If the daily limit is 3% of the initial balance ($150), the trader has $90 of daily limit remaining on Tuesday because the overnight loss already consumed $60 of it.
Traders who hold positions overnight need to account for this. An overnight position that turns against you can leave a very narrow daily buffer for the following session. Managing overnight exposure as part of daily limit awareness is a core funded account skill.
Daily limit vs maximum drawdown: two separate rules
New prop traders frequently confuse the daily loss limit with the maximum drawdown. They are two distinct rules that apply simultaneously.
| Rule | What it measures | Reference point | When it resets |
|---|---|---|---|
| Daily loss limit | Loss in a single session | Day's opening balance | Every calendar day |
| Maximum drawdown | Total account loss from reference | Account high (trailing) or initial balance (static) | Never resets |
Both rules are active at all times. Breaching either one triggers account action.
The key implication: a trader who has performed well and built significant profit is not exempt from the daily limit. A trader sitting at $6,000 on a $5,000 account can still hit the $150 daily limit and have trading suspended, regardless of the $1,000 cushion above the maximum drawdown floor.
On the Velotrade 1-Step Pro challenge, both limits are set at 3% of the initial account balance. This means at account activation, the maximum total drawdown ($150) equals the daily loss limit ($150). A single bad session that hits the daily limit at account open simultaneously breaches the maximum drawdown. This is the most technically demanding moment of the evaluation: the first day, before any profit has been built.
As the account grows, the gap between the daily limit and the maximum drawdown floor expands. On a $5,000 account that has grown to $5,400:
- Maximum drawdown floor: $4,850 (static, fixed)
- Current distance to floor: $550
- Daily limit: $150 (fixed)
A bad session that hits the $150 daily limit consumes 27% of the remaining maximum drawdown buffer in a single day. The two rules are not isolated. Each day's outcome narrows or widens the relationship between them.
For a full breakdown of how maximum drawdown models work, see EOD trailing vs tick-by-tick trailing drawdown explained and static maximum drawdown explained. For the complete rules framework, see crypto prop firm rules explained.
How many losing trades before you breach?
See your drawdown floor, daily loss budget, and losing trade capacity for any account size — before you place a single trade.
Velotrade daily loss limit specifications
| Challenge | Account size | Daily loss limit | Calculation basis |
|---|---|---|---|
| 1-Step Classic | $5,000 | $150 (3%) | Fixed initial balance |
| 2-Step Classic | $5,000 | $150 (3%) | Fixed initial balance |
| 1-Step Pro | $5,000 | $150 (3%) | Fixed initial balance |
The daily loss limit is the same across all three Velotrade challenges: 3% of the initial account balance, fixed from account activation.
What happens when you hit the daily limit
When the daily loss limit is reached, the platform halts new position entries for the remainder of the calendar day. Any open positions remain active and continue to move with the market. The restriction is on opening new trades, not on managing existing ones.
Trading resumes at the next UTC calendar day reset.
Repeated daily limit hits across multiple sessions are worth examining. A trader who hits the daily limit on multiple consecutive sessions is not experiencing bad luck. They are running a position size or strategy that is structurally incompatible with the risk rules. The daily limit is a signal, not just a penalty.
How to trade around the daily limit
The most effective way to protect a funded account from involuntary daily limit hits is to set a personal daily stop that sits below the official limit. This creates a buffer between your own risk management and the firm's breach trigger.
Practical approach:
Set a personal daily maximum loss at 60%–70% of the official daily limit. On a Velotrade account with a $150 daily limit, a personal daily stop at $90–$105 means:
- You stop trading for the day when your P&L reaches -$90 to -$105
- A further adverse move can occur without triggering the official limit
- You never trade emotionally with the daily limit directly in front of you
When the personal stop is hit, close open positions and stop trading for the session. Do not chase the loss. Do not average down. The session is done.
Common daily limit mistakes
Mistake 1: Not accounting for overnight positions. Carrying a losing overnight position into a new session that immediately goes further against you is the fastest way to hit the daily limit before the trading day has properly started. Overnight positions are not free. They consume daily buffer before you place a single new trade.
Mistake 2: Sizing up after an early loss. The urge to recover from a bad start by increasing position size compounds the risk directly. A 1% account loss in the first hour leaves 2% of daily limit remaining. Doubling position size to recover turns a recoverable session into a daily limit breach if the next trade also loses.
Mistake 3: Treating the daily limit as an acceptable target. Some traders unconsciously accept that losing the full daily limit is fine if they can win it back tomorrow. This approach ignores the interaction with the maximum drawdown. Three consecutive daily limit sessions on a Pro challenge consume the entire maximum drawdown buffer.
Mistake 4: Forgetting the limit resets at UTC midnight, not local midnight. If your local timezone is UTC+8, your calendar day ends at 08:00 local time, not midnight. Traders in Asian timezones who trade early morning sessions may find the daily limit resets mid-session, creating a confusing P&L baseline.
Position sizing that respects the daily limit
Position sizing on a funded account should work backward from the daily limit, not forward from a profit target.
Framework:
- Determine the daily limit in dollars ($150 on a $5,000 Velotrade account)
- Set a personal daily stop at 70% of that limit ($105)
- Decide the maximum number of losing trades you could absorb in a session (e.g., 5)
- Divide the personal daily stop by that number to get the maximum per-trade risk ($105 / 5 = $21 per trade)
- Size every position so that the stop loss corresponds to $21 or less in account loss
At $5,000, $21 per trade is 0.42% account risk per trade. This is conservative, but it means five full stop-outs in a session still leave 30% of the daily limit as buffer, and the maximum drawdown floor is nowhere near being threatened.
For a comprehensive approach to passing a prop challenge, see how to pass a crypto prop challenge. For a step-by-step guide to becoming a funded trader, see how to become a funded crypto trader. For an overview of the best-structured challenges available, see best crypto prop firms 2026.
Disclaimer: Challenge rules and daily loss limit structures are subject to change. Always verify current terms directly on the Velotrade challenges page before purchasing.
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About the author
Vittorio De Angelis
Executive Chairman
Former equity-derivatives trader at JP Morgan, Dresdner Kleinwort and Bank of America in London. Later Head of Brokerage at a global broker in Hong Kong.
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