What does Daily Loss Limit mean?
A Daily Loss Limit, often shortened to DLL, restricts how much an account may lose during a trading day. The exact reset time, calculation basis and consequences of reaching the limit depend on the provider.
Why it matters
- The DLL can be tighter than the account's overall maximum drawdown.
- A single volatile session can therefore violate the daily rule even when the account remains above its broader drawdown threshold.
- Some firms use a hard breach while others temporarily lock trading until the next session.
How it works
- 01
The provider defines a daily starting reference or intraday calculation method.
- 02
Losses are measured against that reference.
- 03
At the threshold, trading may be disabled or the account may be considered breached depending on the rules.
Example
An account with a $1,000 Daily Loss Limit may have a much larger overall maximum drawdown. Losing $1,000 within the firm's defined trading day can still trigger the daily restriction first.
Common misunderstandings
- DLL and maximum drawdown are not the same rule.
- Different providers use different session reset times.
- Realized and unrealized P&L treatment can differ between rule sets.
Educational reference
This glossary explains terminology and
general market concepts. It is not a
trading signal or a guarantee of future
results.