Daily drawdown
Daily drawdown is the loss limit an account may accumulate within a single trading day. Breaching it usually terminates the account immediately, even if the month is profitable. Run this calculation now: drawdown calculator
How the limit is calculated
The limit is almost always a percentage of the account — 4% and 5% are the most common. What breaks accounts is not the percentage but the base it applies to. Some firms measure it against the starting-day balance, others against starting-day equity, others against the highest equity ever reached. On a 100k account at 5%, those three bases trigger at different moments on the same day.
The second detail is the reset time. The firm's day is rarely your day: it usually rolls over at 5pm New York time, which shifts across the year with daylight saving. A trade opened after that hour may belong to tomorrow for the firm and to today for you.
What counts as a loss
In most contracts floating loss counts. An open position in the red already consumes the limit before it is closed. Commissions, swap and fees usually count too. Anyone computing the limit from closed trades only finds out when the account is already locked.
The practical defence is to trade with headroom: treat 60% to 70% of the limit as your real ceiling and stop the day when you touch it. TCC tracks limit consumption per day and warns you before the breach instead of reporting it afterwards.