TLDR: The Daily Loss Limit is the maximum you can lose in one day, resetting at midnight. Example: in a $100,000 Stellar 2-Step, the daily limit is $5,000. The Maximum Loss Limit is the maximum you can lose overall. Example: in the same account, you cannot drop below $90,000 (10%). Breaching either rule pauses or ends your account.
What is Daily Loss Limit?
The Daily Loss Limit sets the maximum amount you can lose in a single trading day, based on a percentage of your initial account balance. It resets every day at midnight (server time).
For Stellar 2-Step Accounts: You can lose up to 5% of your initial balance each day. For a $100,000 account, the daily limit is $5,000.
For Stellar 1-Step Accounts: The limit is 3%, meaning a maximum daily loss of $3,000 for a $100,000 account.
For Stellar Lite Accounts: The limit is 4%, allowing a maximum loss of $4,000 per day for a $100,000 account.
Example of Daily Loss Limit:
If you start with $100,000 and make a $2,000 profit by noon, your new Loss limit for that day becomes $7,000 ($5,000 + $2,000). Exceeding this limit, either through closed or open trades, or not factoring in floating losses, will result in your account being paused until reset.
How to calculate Daily Loss Limit?
To calculate your Daily Loss Limit, you can check out our detailed FAQ on "How can I calculate the Daily Loss Limit?" or watch this step-by-step video guide:
From here, you’ll learn exactly how to calculate Daily Loss Limit it like a pro.
What is Maximum Loss Limit?
The Maximum Loss Limit sets the maximum amount you can lose in each phase of your trading journey. It is based on your initial balance and resets once you pass the Challenge Phase, starting fresh in the FundedNext Account Phase.
For Stellar 2-Step Accounts: The Maximum Loss Limit is 10% of your initial balance. For a $100,000 account, you cannot let your balance fall below $90,000.
For Stellar 1-Step Accounts: The Maximum Loss Limit is 6%, meaning your balance cannot drop below $94,000.
For Stellar Lite Accounts: The Maximum Loss Limit is 8%, so your account cannot fall below $92,000.
Example of Maximum Loss Limit:
If you make a $4,000 profit on a Stellar 2-Step $100,000 Challenge, your new Maximum Loss Limit increases to $14,000 (original $10,000 limit + $4,000 profit). This adjustment ensures that profits provide additional flexibility for risk management. However, if your balance falls below $90,000, including floating losses, you breach the Maximum Loss Limit.
Daily Loss Limit and Maximum Loss Limit Breach Consequences:
Daily Loss Limit Breach:
If you exceed your Daily Loss Limit but not the Maximum Loss Limit, your account will be paused, and you won’t be able to place any trades.
The Challenge Account will remain paused until you reset it.
If you have breached a FundedNext Account, you will need to restart with a new Challenge Account.
Maximum Loss Limit Breach:
If you breach the Maximum Loss Limit, your account will be paused, and you will not be able to continue trading on that Challenge Account until you reset it.
If you have breached a FundedNext Account, you will need to restart with a new Challenge Account.
Impact of Account Scaling for Daily Loss Limit and Maximum Loss Limit
When you scale up your account, both the Daily Loss Limit and the Maximum Loss Limit adjust proportionally based on the new account size. For instance, if you double your initial account balance, your loss limits also double, maintaining consistent risk management parameters.
Summary:
If you breach your Daily Loss Limit but did not breach your Maximum Loss Limit, your account will be paused, and you will not be able to place a trade.
Your Challenge Account will not be reactivated at the end of the day until you reset it.
If you breach a FundedNext Account, you will need to restart with a new Challenge Account.
Why Does FundedNext Enforce a Daily Loss Limit and a Maximum Loss Limit?
FundedNext enforces these loss limits as a critical component of risk management. The Daily Loss Limit prevents excessive losses within a single trading day, ensuring day-to-day stability, while the Maximum Loss Limit safeguards against unsustainable cumulative losses. These measures help protect both traders and FundedNext, promoting disciplined and responsible trading behaviors.
Additional Resources
For more detailed explanations and examples of Daily Loss Limit and Maximum Loss Limit, refer to the following resources: