Daily Loss Limit is the maximum amount of money a trader is allowed to lose in a day. For Phase 1 and 2 Challenge Accounts, as well as the Hola Prime Accounts, this limit is set at 5% of the previous day's closing balance.
The trading rule stipulates that the loss on any day, which is the sum of current floating PnL and total PnL on closed trades, cannot exceed the Maximum Daily Loss Limit. The daily maximum loss is reset every day at 17:00 EST server time.
For Instance: If at the end of day 2, your account’s closing balance is $110,000, then the loss limit for Day 3 would be= $5,500($110,000 * 5%)
This means your equity on Day 3 can't go below $104,500(1,10,000- 5% of $110,000).
If your equity goes below $104,500 at any moment on day 3, your account will be closed. If during the day, you make a profit of $7,000, then the loss limit during the day shall be allowed up to ($110,000*5% + $7,000), which will be $12,500.
Another Example: You have a $110,000 trading account. During the day, you realize a significant loss of around $3,000. After this, you initiate another trade. At any given moment, if your running trades exceed the floating loss of $2,500, your account will breach the daily loss limit.
Hence, if your trades (including floating losses) exceed a $5,500 loss within any trading day, you're breaching this rule.
2.2 Overall Loss Limit
The Maximum Overall Loss limit is the amount your account’s equity or balance can’t go below. For Phase 1 and 2 Challenge Accounts as well as the Hola Prime Accounts, this limit is set at 8% of the Initial Balance. The rule states that the sum of the currently floating PnL (Profit and Loss) and the realized PnL (Profit and Loss) on all closed positions must not hit the Maximum overall Loss Limit.
For example, if a trader has a $100,000 account, the Maximum Loss limit means the equity or balance cannot drop below $92,000 at any time.
2.3 Profit Target
In Phase 1, traders need to earn a profit equal to 8% of the initial account balance.
Phase 2, the profit target decreases to just 5% based on the initial account balance.
For instance, if a trader begins with a $100,000 account size, they should aim for $8,000 profit in Phase 1 and $5,000 profit in Phase 2.
2.4 Minimum Trading Days
You are required to trade for a minimum of 2 days.