Understanding No Daily Drawdown Prop Firms
Drawdown rules are among the most critical factors when choosing a prop firm. They determine how much risk you can take and how much flexibility you have to recover from losses. Prop firms with no daily drawdown offer a significant advantage: they only enforce an overall drawdown limit, giving you the freedom to have bad trading days without immediate account closure.
Traditional prop firms often use both daily and overall drawdown limits. For example, a firm might allow a 5% daily drawdown and a 10% overall drawdown. This means if you lose 5% in a single day, your account closes immediately—even if you're still within the 10% overall limit. This creates unnecessary pressure and can lead to account closures from temporary market volatility.
No daily drawdown firms eliminate this daily restriction. You only need to worry about the overall drawdown limit, which is typically calculated from your account's starting balance or highest equity point. This approach is more forgiving, reduces stress, and allows for natural market fluctuations without penalizing traders for single-day losses.
In this comprehensive guide, we'll explore which prop firms offer no daily drawdown, how this benefit works in practice, why it's advantageous for different trading styles, and how to choose the best firm for your needs.
What is Daily Drawdown?
Daily Drawdown Explained
Daily drawdown is a risk management rule that limits how much you can lose in a single trading day. It's calculated from either:
- •Starting Balance: Maximum loss from the account's initial balance
- •Highest Equity: Maximum loss from the account's peak equity
Example: $100,000 account with 5% daily drawdown = maximum $5,000 loss per day. Exceed this, and your account closes immediately.
Overall Drawdown Only
With no daily drawdown, only the overall drawdown limit applies. This is typically:
- ✓Static Drawdown: Calculated from starting balance (e.g., 10% of $100K = $10K limit)
- ✓Trailing Drawdown: Moves up with profits but doesn't reset daily
Example: $100,000 account with 10% overall drawdown = can lose up to $10,000 total, regardless of daily performance.
Daily Drawdown vs Overall Drawdown Only
No Daily Drawdown (Favorable)
- ✓Only overall drawdown limit applies
- ✓Can have bad days without immediate closure
- ✓More flexibility for recovery
- ✓Less stress about daily performance
- ✓Better for swing and position trading
- ✓Allows for market volatility
- ✓Reduced psychological pressure
Best For: Swing traders, position traders, traders who experience occasional bad days, and those who prefer less daily pressure.
With Daily Drawdown (Stricter)
- ✗Both daily and overall limits apply
- ✗Bad day can close account immediately
- ✗Less flexibility for recovery
- ✗More pressure on daily performance
- ✗Restrictive for certain trading styles
- ✗Can close account from temporary volatility
- ✗Higher psychological stress
Best For: Day traders with consistent daily performance, scalpers, and traders comfortable with strict daily limits.
How No Daily Drawdown Works in Practice
Real-World Example
Let's say you have a $100,000 funded account with a 10% overall drawdown limit and no daily drawdown restriction:
Key Point: With no daily drawdown, you could lose $5,000 in a single day (5% of account) and still be safe, as long as your total drawdown from the starting balance doesn't exceed $10,000 (10% overall limit). This flexibility allows for recovery from temporary losses.
Benefits of No Daily Drawdown
- ✓Recovery Flexibility: Can recover from bad trading days without account closure
- ✓Less Pressure: Don't need perfect daily performance
- ✓Swing Trading Friendly: Better for multi-day positions
- ✓Reduced Stress: Focus on overall performance, not daily limits
- ✓Volatility Tolerance: Can withstand temporary market swings
- ✓Better Psychology: Less fear of daily losses
When Daily Drawdown Matters
- ⚠Day Trading: If you're a consistent day trader, daily limits may not matter as much
- ⚠Risk Management: Daily limits can help prevent catastrophic single-day losses
- ⚠Discipline: Some traders prefer daily limits for forced discipline
- ⚠Firm Protection: Daily limits protect firms from extreme single-day losses
Prop Firms With No Daily Drawdown
The following prop firms offer no daily drawdown limits, using only overall drawdown restrictions. Always verify current rules as policies can change:
Apex Trader Funding
No Daily Drawdown | Trailing Drawdown Only
Apex Trader Funding is one of the most popular prop firms specifically because they don't have daily drawdown limits. They use only a trailing drawdown system, which moves up with your profits but doesn't reset daily. This means you can have losing days without immediate account closure, as long as you don't exceed the trailing drawdown limit.
Their trailing drawdown is typically 6% for the evaluation phase and 5% for funded accounts. Since there's no daily reset, you have the flexibility to recover from temporary losses over multiple days.
My Funded Futures
Overall Drawdown Only | Weekend Holding
My Funded Futures uses only overall drawdown limits with no daily restrictions. This, combined with their allowance for weekend holding, makes them ideal for swing traders who want maximum flexibility. Their overall drawdown is typically 10% of the starting balance.
Take Profit Trader
Simple Rules | Overall Drawdown Only
Take Profit Trader offers straightforward rules with no daily drawdown limits. They use only overall drawdown restrictions, making them suitable for traders who want flexibility without daily pressure.
No Daily Drawdown Prop Firms Comparison
| Prop Firm | Drawdown Type | Max Funding | Profit Split | Best For |
|---|---|---|---|---|
| Apex Trader Funding | Trailing Only (No Daily) | $300,000 | 90% | Most Traders |
| My Funded Futures | Overall Only (No Daily) | $200,000 | 80% | Swing Traders |
| Take Profit Trader | Overall Only (No Daily) | $150,000 | 90% | Simple Rules |
Why Choose No Daily Drawdown Prop Firms?
Reduced Stress
Without daily drawdown limits, you don't need to worry about perfect daily performance. This reduces psychological pressure and allows you to focus on long-term profitability rather than daily results.
Recovery Flexibility
Bad trading days happen to everyone. With no daily drawdown, you can recover from losses over multiple days as long as you stay within the overall limit. This flexibility is crucial for swing and position traders.
Better for Swing Trading
Swing traders hold positions for days or weeks. Daily drawdown limits can be problematic when positions move against you temporarily. No daily drawdown allows positions to develop naturally.
Understanding Drawdown Rules
Learn about different types of drawdown rules and how they affect your trading
Frequently Asked Questions
What is daily drawdown?
Daily drawdown is a risk management rule that limits how much you can lose in a single trading day. For example, if you have a 5% daily drawdown limit on a $100,000 account, you can lose a maximum of $5,000 in one day. Prop firms with no daily drawdown only use overall drawdown limits, giving traders more flexibility to recover from daily losses.
Which prop firms don't have daily drawdown limits?
Several prop firms use only overall drawdown limits without daily restrictions, including Apex Trader Funding, My Funded Futures, Take Profit Trader, and others. These firms are more flexible and allow traders to recover from daily losses as long as they don't exceed the overall drawdown limit.
Is no daily drawdown better for traders?
Yes, no daily drawdown is generally more favorable for traders as it provides more flexibility, allows recovery from bad trading days, reduces stress about perfect daily performance, and is better suited for swing trading and position trading strategies.
What is the difference between daily drawdown and overall drawdown?
Daily drawdown limits how much you can lose in a single trading day, while overall drawdown limits your total loss from the account's starting balance. With no daily drawdown, only the overall limit applies, meaning you can have losing days as long as your total drawdown doesn't exceed the overall limit.
Can I still lose my account with no daily drawdown?
Yes, you can still lose your account if you exceed the overall drawdown limit. No daily drawdown doesn't mean unlimited losses—it just means you're not restricted by daily limits. You still need to manage risk and stay within the overall drawdown limit.
Related Resources
Prop Firms Guide
Complete guide to proprietary trading
No Trailing Drawdown
Firms with static drawdown only
Balance-Based Drawdown
Understanding balance-based limits
Drawdown Calculator
Calculate your drawdown risk
How to Pass Challenges
Tips for passing prop firm evaluations
Compare Prop Firms
Side-by-side firm comparison