Prop trading accounts
What is a Daily Loss Limit and how does a prop firm’s automated risk server handle a trader who breaches this metric?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A daily loss limit caps losses per trading day; breaching it typically triggers an automated risk server to flatten positions and disable further trading that day.
How it works
Firms enforce this via software that monitors real-time P&L and forcibly closes positions once the preset dollar threshold is exceeded, per individual firm policy.
An example
A $1,000 daily loss limit auto-flattens all open contracts.
Risk & limitations
Enforcement mechanics and thresholds are firm-specific, not regulator-mandated.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.