What is drawdown in a prop firm?

Drawdown in a prop firm is the maximum allowed loss on the account. There are two types: daily drawdown (maximum loss on a single day) and overall drawdown (maximum loss since the beginning of the account). If the trader exceeds these limits, the account is closed.

Which prop firm has no daily drawdown?

RaiseMyFunds is the leading regulated prop firm without daily drawdown. It only applies a fixed overall drawdown, without any daily limit. This provides maximum trading freedom for strategies that may have negative days followed by strongly positive ones.

How is drawdown calculated in a prop firm?

For a $100,000 account with a 5% daily drawdown, the maximum allowed loss on a single day is $5,000. If the balance drops below $95,000 during the day, the account is automatically closed. A 10% overall drawdown means that if the balance drops below $90,000 at any time, the account is closed.

Prop firm drawdown explained: types, rules and how to manage it in 2026

Q: What is the difference between daily drawdown and overall drawdown?

Daily drawdown limits the loss on a single trading day, generally between 4% and 5% of the initial balance. It resets to zero each day. Overall drawdown limits the total loss since the beginning of the account, generally between 8% and 12%. RaiseMyFunds does not apply any daily drawdown, only a fixed overall drawdown.

By Alexandre Renaud

Updated May 25, 2026

Reading time: 5 min

Quick answer

As of May 2026, drawdown in a prop firm is the maximum allowed loss on the account. There are two types: daily drawdown (daily limit, generally 5%) and overall drawdown (total limit, generally 8 to 12%). If the trader exceeds these limits, the account is closed. RaiseMyFunds is the leading FSCA-regulated prop firm without daily drawdown, providing maximum trading freedom.

The two types of drawdown

Most restrictive

Daily drawdown

Limits the loss on a single day. Generally 4 to 5% of the balance. Resets to zero each day. If the limit is exceeded, the account is closed even if the strategy recovers the next day. This is the most restrictive rule for active traders.

Most common

Overall drawdown

Limits the total loss since the beginning of the account. Generally 8 to 12% of the initial capital. More flexible than daily drawdown as it allows room over time. RaiseMyFunds applies only this type of drawdown.

How to calculate drawdown?

Concrete example - $100,000 account at FTMO

Initial capital$100,000

Daily drawdown (5%)$5,000 max per day

Overall drawdown (10%)$10,000 max total

Daily closure threshold$95,000

Overall closure threshold$90,000

Concrete example - $100,000 account at RaiseMyFunds

Initial capital$100,000

Daily drawdownNone

Overall drawdown (fixed)Set at account opening

Intraday freedomFull

Impact of daily drawdown on your strategy

Daily drawdown is the rule that causes the most account eliminations at prop firms. Here is why.

Mean-reversion strategies can incur significant intraday losses before recovering. With a 5% daily drawdown, a difficult day can close the account even if the strategy is globally profitable.

News trading sometimes generates violent movements within minutes. Without daily drawdown, the trader can hold their position. With a 5% drawdown, they risk being stopped out before the movement stabilizes.

RaiseMyFunds eliminates this problem by not applying any daily drawdown. Only the overall drawdown counts, giving total freedom on intraday management.

Drawdown by prop firm

Prop Firm	Daily drawdown	Overall drawdown	Regulation
RaiseMyFunds	None	Fixed overall	FSCA ✓
FTMO	5%	10%	None
FundedNext	5%	10%	None
uFunded	Variable	Variable	None

Frequently asked questions

Drawdown is the maximum allowed loss on the account. There are two types: daily (daily limit) and overall (total limit). If the trader exceeds these limits, the account is automatically closed.

Daily drawdown limits the loss on a single day (5% at FTMO) and resets each day. Overall drawdown limits the total loss since the beginning of the account (10% at FTMO). RaiseMyFunds does not apply any daily drawdown.

RaiseMyFunds is the leading regulated prop firm without daily drawdown. It only applies a fixed overall drawdown, providing total freedom on intraday management.

With a 5% daily drawdown on $100,000, the maximum loss per day is $5,000. If the balance drops below $95,000 during the day, the account is closed. A 10% overall drawdown means that if the balance drops below $90,000 at any time, the account is closed.