Account breach meaning in trading
In prop trading, an account breach means a hard rule was broken and the account is closed on the spot. The two usual causes are the daily loss limit and the max drawdown; firms also list rule violations such as banned strategies.
Account breach means the account hit a hard limit and is over. On a $100,000 challenge with a 5% daily limit, equity falling to $5,000 below the day's start, even in an open trade that later recovers, breaches it. The fee or the funded account is lost.
What causes a breach
| Cause | Example on $100,000 |
|---|---|
| Daily loss limit | Equity $5,000 below the day's start (5% limit) |
| Max drawdown | Equity at $90,000 (10% static) or below a trailing floor |
| Rule violation | Prohibited strategy, copy trading between accounts, trading during restricted news |
Example: the breach that recovers too late
You are down $3,000 on the day with a 5% limit. You open a trade that dips $2,100 against you before turning profitable. At the dip, equity was $5,100 below the day's start, so the account breached at that moment. The platform closes it automatically; the later recovery does not count. This is why limits are measured on equity, including floating P&L.
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
How to avoid a breach
- Size every trade so one full stop uses at most a quarter of the daily limit.
- Stop for the day after two losses; most breaches follow a revenge trade.
- Know whether your max drawdown is static or trailing.
- After a breach, an account reset is sold at a discount; fix the cause before buying it.
FAQ
What does account breached mean?
The prop firm closed the account because a hard rule, usually the daily loss limit or the max drawdown, was broken. The challenge fee or the funded account is lost.
Can a breached account be recovered?
No. Firms sell a reset or a new challenge instead, often at a discount.
Does a breach count open trades?
Yes, at most firms. Limits are checked on equity, so an open loss can breach the account before you close the trade.