The rule that ends accounts while the trader is still "fine"
After maximum drawdown, the daily loss limit is the second most common cause of failure — and the most misunderstood, because of one detail.
It is measured on equity
Most firms compute the daily limit from equity: closed profit and loss *plus* every open position's floating result.
That means a losing position that is still open, that you fully intend to hold, that may well recover — counts against the limit right now.
A trader who is down $1,800 realised and holding a position $900 underwater is at $2,700 against a $3,000 daily limit. They will describe themselves as "down $1,800 today." The firm's system disagrees, and the firm's system is the one that closes accounts.
Where the day starts
The reference point is usually the balance at the daily reset, not your lowest point, and not your starting equity for the challenge.
Reset times differ — 00:00 server time, 17:00 New York, and midnight UTC are all common. Server time is rarely your time. A trader in Dhaka whose firm resets at 17:00 New York is resetting at 03:00 local, in the middle of a sleeping session.