Prop Firm Rules Explained (2026): Daily Drawdown, Max Loss & Targets
Every prop firm publishes the same four headline rules, and most traders still fail on one of them within two weeks. The difference between passing and paying again is knowing exactly what each rule measures, in dollars, before you place a trade. This guide converts a typical rulebook into numbers on a $100,000 account.
Prop firm rules are the limits a funded-account challenge enforces: a profit target (often 8–10% in phase 1 and 5% in phase 2), a daily loss limit, also called daily drawdown (often 4–5% of the starting balance), a max loss or max drawdown (often 8–10%), minimum trading days (often 3–5) and fine print such as consistency and news rules. Break a loss rule once and the account is over.
Profit target: the visible goal
The profit target is the percentage gain that completes a phase. A typical two-step firm asks for 8% in phase one and 5% in phase two — $8,000 and then $5,000 on a $100,000 account. Most one-step challenges ask for around 10% once.
Many firms now sell challenges without time limits, though some still impose 30 or 60 calendar days. A deadline matters because it forces a minimum pace, and pace is set by risk per trade.
The target itself is the least dangerous rule, because missing it today costs nothing. To see it as workload rather than a wall, break it into trades: at $1,000 risk per trade and winners twice your risk, ten trades at a 60% win rate produce 6 × $2,000 − 4 × $1,000 = $8,000. The loss rules below are what actually end attempts.
Daily loss limit: the rule that ends most attempts
The daily loss limit caps how much you may lose in a single day, commonly 4% to 5%. On $100,000 with a 5% limit, your equity may not drop more than $5,000 below the day's starting point. Firms differ on whether that anchor is the day's opening balance or opening equity, so confirm which applies before you hold positions overnight.
The limit counts floating losses, which is where attempts die. Suppose you are down $3,800 on the day and you open a 2-lot position on a major currency pair, where each pip moves your equity by about $20. Your remaining buffer is $1,200, which is exactly 60 pips. One ordinary volatility spike can cover that distance in minutes.
The same buffer traded at 0.5 lots gives you 240 pips of room. The market did not change between those two sentences; the position size did. Near the limit, sizing is the only variable you control.
Notice the trap in that example: at down $3,800, many traders increase size to win the day back. That is the exact geometry of a blown account — the closer you are to the line, the smaller the move that ends everything, precisely when your size is growing.
Daily drawdown calculator
Tap your account, your firm's daily limit and how today is going. It shows where your floor is and how many full stops you can still take.
Account size
Daily loss limit
Today so far
Risk per trade
Max drawdown: the floor under the whole attempt
Max drawdown caps total loss from the starting balance, commonly 10%. On $100,000 the floor is $90,000: if equity touches $89,999 at any point in the attempt, it is over, regardless of how strong the surrounding weeks were.
The definition of the floor matters as much as the number. A static floor stays at $90,000 forever; a trailing floor rises as your equity rises; end-of-day variants move only on closing balances. The differences are large enough to fail identical trades under different firms, and they get a full walkthrough in static vs trailing vs end-of-day drawdown.
Budget the allowance like capital. With a $10,000 total allowance, $1,000 risk per trade means ten consecutive full losses end the attempt; at $500 risk it takes twenty. Many traders pick their risk per trade by deciding how long a losing streak the attempt should be able to survive.
Minimum trading days: why speed does not pay
Minimum trading days require activity on a set number of separate days, commonly 3 to 5 per phase. One oversized lucky day cannot complete a phase on its own, which is the point: the firm wants evidence of repeatability, not variance.
The rule interacts with the target. An $8,000 target across a 4-day minimum implies a plan with a realistic daily expectation, not one all-in trade. Note also that a trading day usually means a day with at least one executed position, measured in the firm's platform time zone — an easy detail to miss if you trade late sessions and your midnight is not theirs.
The rules hiding in the FAQ
The four headline rules are not the whole contract. Common extras include consistency clauses that cap your best day as a share of total profit, restrictions on trading through major scheduled news, weekend holding bans, inactivity limits, and prohibited tactics such as copying trades between accounts.
These are the rules that surprise people at payout time, because breaking them often does not fail the account in real time — it surfaces later, during review. Consistency rules and news trading restrictions are worth reading before you pay, not after a withdrawal is refused.
Turn the rulebook into dollars before you start
Percentages hide risk; dollars reveal it. Before an attempt, write out the firm's exact rules as amounts on your account size and what one breach costs you.
| Rule | Typical setting | On $100,000 | One breach means |
|---|---|---|---|
| Profit target | 8%, then 5% | Reach $108,000, then $105,000 | Nothing lost, phase incomplete |
| Daily loss limit | 5% | Never −$5,000 against the day's start | Attempt over |
| Max drawdown | 10% | Equity floor at $90,000 | Attempt over |
| Minimum trading days | 3–5 | Profit spread across sessions | Pass withheld until met |
Prop firm rules by firm
The headline rules look alike from firm to firm, but the details differ enough to decide which program suits you. These are the limits of each firm's best-known two-step program, the same numbers the FundedLot app fills in when you pick a firm.
| Firm (two-step program) | Daily loss | Max loss | Phase 1 target | Phase 2 target |
|---|---|---|---|---|
| FTMO (static max loss) | 5% | 10% | 10% | 5% |
| FundedNext | 5% | 10% | 8% | 5% |
| The5ers | 5% | 10% | 8% | 5% |
| FundingPips | 5% | 10% | 8% | 5% |
| Alpha Capital | 5% | 10% | 8% | 5% |
| E8 Markets | 5% | 8% | 8% | 4% |
| MyFundedFX | 5% | 8% | 8% | 5% |
| FXIFY | 4% | 10% | 10% | 5% |
| Maven Trading | 4% | 8% | 8% | 5% |
| Blue Guardian | 4% | 8% | 8% | 4% |
| Topstep (futures, trailing) | 2% | 4% | 6% | — |
| Apex Trader Funding (futures, trailing) | — | 5% | 6% | — |
Percentages of the starting balance for each firm's best-known two-step program, as the FundedLot app prefills them; futures firms count drawdown in dollars, shown as the 50K account's share. Programs and rules change, so your firm's dashboard has the final word. FundedLot is not affiliated with any firm listed.
Two firms with identical percentages can still differ on how the daily limit is anchored (balance or equity), whether the max loss is static or trailing, and which fine-print rules apply. Read the firm's FAQ for those before you buy.
Then rehearse against those numbers until respecting them is automatic. Rules you can recite from memory under pressure are rules you keep; rules you half-remember are the ones that end attempts on an otherwise ordinary Tuesday.
Prop firm rules: FAQ
What are the most common prop firm rules?
A profit target per phase, a daily loss limit, a maximum loss (drawdown) limit and a minimum number of trading days. Many firms add consistency rules, news-trading restrictions, weekend holding rules and bans on copy trading or account sharing.
What is the daily drawdown rule in a prop firm?
The daily drawdown, or daily loss limit, is the most your account may lose in one trading day, commonly 4% to 5% of the starting balance. It is measured from the day's starting balance or equity and usually counts open losses, so a losing open trade can breach it before you close anything.
Does the daily loss limit count open trades?
At most firms, yes. The limit is checked against equity, which includes floating profit and loss on open positions. A trade that is $5,000 under water on a $100,000 account with a 5% limit breaches the account even if you never close it.
What happens if I break a prop firm rule?
Breaking a loss rule (daily loss or max loss) ends the challenge or funded account immediately; you lose the fee or the account. Breaking a fine-print rule, such as a consistency or news rule, more often delays a pass or a payout, or voids profits made against the rule.
Can I hold trades over the weekend or through news?
It depends on the firm and the program. Some allow both, some ban holding over the weekend on funded accounts, and many restrict opening or closing trades in the minutes around major scheduled news. Check the firm's rules for your exact program.
Which prop firm has the easiest rules?
There is no single answer, but rules are easier to follow when the max loss is static rather than trailing, the daily limit is anchored to balance rather than equity, there is no consistency rule and no time limit. Compare those four points, then practice the exact numbers before you pay.