What is the Daily Loss Limit and what happens if I exceed it?

What it Means:

Your Net P&L cannot hit or exceed the Daily Loss Limit at any point during the trading day (5:00 PM CT-3:10 PM CT). If at any time your Net P&L does exceed this amount for your account, any open trading positions will be flattened, any pending orders will be canceled, and your account may be prevented from placing any new trades until the start of the next trading day (5:00 PM CT). The account automatically becomes ineligible for a Funded Account® once the Daily Loss Limit is exceeded.

For example, in a $150K Trading Combine®, the Daily Loss Limit is $3,000. Therefore, if at any point during the trading day your Net P&L hits or exceeds -$3,000, the Daily Loss Limit is considered hit.

The Daily Loss Limit is factored based on each trading day’s Net P&L, which includes simulated commissions, fees, and both unrealized and realized trade P&L values.

We recommend that all NinjaTrader users utilize the R|Trader platform in order to accurately monitor their Net P&L.

This rule is updated at the end of each active trading day. You can keep track of the rule in relation to your account using your dashboard.

Why it is Important:

  •  Adhering to a loss limit instills discipline and proper risk management
  •  At a certain point, you need to call a bad day, a bad day (we all have them)
  •  It allows you to live to trade another day, the markets will be there tomorrow
  •  Losses can be emotional, emotions affect decision making

What happens if I exceed my Daily Loss Limit:

Your position will be flattened should you hit or exceed the Daily Loss Limit. We advise you to cover the position on your own. If this does not occur, you may be automatically flattened by the Risk Manager. If your Unrealized Net P&L hits or exceeds your Daily Loss Limit at any point during the Trading Combine®, your account is no longer eligible for a Funded Account®. You have the option to reset your account.

 

When a Loss Limit threshold is hit, the auto liquidation tool sends a market order(s) to close out any open positions. When this occurs, depending on where the market fluctuated at that time, the trader's P&L may actually land above where that Loss Limit threshold is set, resulting in an incurred loss being less than the Loss Limit itself. Despite the ending P&L after the auto liquidation, if the liquidation occurs it means with certainty that the trader's Net P&L did "hit and exceed" the Loss Limit, which will result in a rule violation.

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