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Home/Glossary/Equity-based loss limit

Drawdown and loss limits · Pro

Equity-based loss limit

By Omer Rapaport · Content updated 11 September 2026

What does Equity-based loss limit mean?

An equity-based loss limit evaluates the account including floating profit and loss. A breach can occur while positions remain open even if the realized balance is above the threshold.

Example

The balance is $50,000 but a $2,100 open loss puts equity at $47,900.

Illustrative example; not a provider’s quoted offer.

Why it matters for prop traders

Waiting for a position to recover may be too late once the monitored threshold has been crossed.

Sources and further reading

The following primary sources support the terminology. Provider rules describe their own products and may change.

  • FTMO - Open losses and equity

Related terms

  • Daily loss limit
  • Daily reset time
  • Drawdown
← All 181 terms

Frequently asked questions

Can a later recovery undo an equity-based breach?

Waiting for a position to recover may be too late once the monitored threshold has been crossed.

Sources: FTMO - Open losses and equity

What is a practical example of Equity-based loss limit?

Illustrative example: The balance is $50,000 but a $2,100 open loss puts equity at $47,900.

Sources: FTMO - Open losses and equity

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