The maximum loss allowed in a single trading day. Exceeding the daily limit immediately fails the challenge. Usually 4-5% of account balance.
Daily drawdown is calculated differently by different firms. Some measure it from the starting balance of the day, others from the highest equity reached during the day. This distinction matters: if you're up $2,000 and then lose $7,000, your daily drawdown from peak is $7,000, which would breach a 5% limit on a $100K account. FTMO uses end-of-day balance for daily DD calculation. Blue Guardian uses a stricter 4% daily limit. Topstep uses just 2%. Always verify your specific firm's calculation method.