Daily loss limit and drawdown rules for prop-firm accounts

Why two limits

Hookmode has two limits. They count different things and they stop different things.

The drawdown budget is per rule. It watches one portfolio rule: how far that rule’s realized P&L has fallen below its own best point in the trading period.

The daily loss limit is per trading account. It watches one account: what that account has lost today, across every rule that trades on it.

You want both because several rules can trade the same account. Each rule can sit well inside its own budget while the account has already lost more than you want to lose in a day. Both checks run on the server, before a trade leaves for your PC, and either one can stop the trade on its own.

The daily loss limit

You set one limit per trading account, in the currency of that account. Hookmode checks it every time a signal asks to open a trade there.

This is what the limit counts:

used = closed losses today − profits today + stop-loss risk of open trades

The count is net, so a profitable close today gives room back. No running counter is stored and no job resets it: the number is computed from your trades each time a signal arrives.

Every trade Hookmode sends carries a stop loss, so its worst case is known the moment it is placed. An open trade holds that amount against the limit until it closes, and the close then replaces it with the real result. The trade the signal is asking for is counted the same way, before it is sent — otherwise a single large trade could always step over the limit.

That is why the limit can be reached with nothing closed at a loss yet. The example below reaches it while a trade is still open.

In the example the limit is $1,000. A 0.50 lot EURUSD trade reserves $300 and then closes at its stop for −$300. A 0.20 lot XAUUSD trade reserves $700 and is still open. Used is $1,000, the limit is reached, and the next signal on that account is refused.

The day resets at midnight, in the timezone you pick for the account.

When the limit is reached, no new trade opens on that account. Three things follow:

• The signal is still received and traced. The refusal is in the trace, with the reason “the account reached its daily loss limit”.
• A Telegram alert goes out, titled “Trading blocked”, naming the account.
• Trades that are already open are left alone. Their stop loss and take profit stay at the broker, and close signals still pass.

The block is released at the next day reset. Turning the limit off releases it too.

What the limit does not see:

• Trades you place by hand in the terminal. Only trades placed through Hookmode are counted.
• A close worse than its stop loss. A gap or slippage takes more than the trade reserved; the number corrects itself when the close lands, so the loss is counted late.
• Your prop firm’s own measure. Firms read floating equity and run their own clock, so their number moves when this one does not. Set the Hookmode limit below the firm’s.

The drawdown budget per rule

The drawdown budget belongs to a portfolio rule — one webhook trading one account. It measures how far the rule’s realized P&L sits below the best point it reached in the trading period. Not the account balance, and not the open trades: only what this rule has closed.

The budget comes from two numbers you already set:

budget = webhook drawdown limit × rule volume factor

The webhook carries the drawdown limit for the trading period, the rule carries its volume factor. A rule trading the same webhook at half volume gets half the budget — which is what you want when one signal fans out to a challenge account and a funded one.

Hard stop is a switch on the rule. With it on, a breach stops new trades on that rule and latches: the block holds until you reset the drawdown by hand, even if later closes bring the number back under the budget. With it off, the drawdown is still measured and shown in the app, but nothing is blocked.

A blocked rule refuses new trades and says so in the trace, and a Telegram alert goes out with the same “Trading blocked” title. Close signals still pass, so a position the rule already opened closes the normal way. Resetting the drawdown starts the measurement again from that moment: closes before the reset stop counting.

In the example the rule’s budget is $500 and the hard stop is on. Four closes take the drawdown to $500, the rule is blocked, and the next signal is refused.

Setting them up

The daily loss limit, per account:

• Open the account in the web app and find the Daily loss limit panel.
• Press Set limit.
• Turn on “Use a daily loss limit”.
• Enter the amount and pick the timezone the day resets in.

The drawdown budget, per rule:

• Open the webhook and set the drawdown limit for its trading period.
• Open the portfolio rule that links the webhook to the account and set its volume factor.
• Turn on “Hard stop at the drawdown limit” so a breach stops new trades.

Questions