The key difference in one sentence.
Daily drawdown limits how much the account can lose during a defined trading day. Total drawdown limits how far the account can decline across the full evaluation. A trader must respect both at the same time.
The exact reference balance, reset time and treatment of open positions must come from the current platform rules and live account display. The examples below are intentionally simplified so the concepts remain clear.
What daily drawdown controls.
Daily drawdown prevents one bad session from consuming too much of the account. It is especially important in crypto because prices can move sharply around liquidations, news, low-liquidity periods and sudden changes in market structure.
A daily limit is not an invitation to lose that amount. It is the outer failure threshold. If a platform publishes a 5% daily drawdown, a trader who routinely risks close to 5% has almost no room for spread, commission, slippage or a second mistake.
Set a personal daily stop below the platform threshold. Once that personal stop is reached, close the session and review the decisions instead of trying to recover immediately.
What total drawdown controls.
Total drawdown protects the account across the complete challenge. Several losing days that remain individually below the daily threshold can still accumulate into a total drawdown breach.
This is why a trader can follow the daily rule and still fail the evaluation. Imagine four controlled but losing sessions. None reaches the daily maximum, yet together they can push the account below its cumulative floor. Total drawdown therefore tests whether the strategy and position sizing remain sustainable over time.
Some platforms use a fixed floor based on the starting balance. Others use equity-based or trailing calculations. Never assume two firms use the same method simply because both display the same percentage.
Simplified examples using a 100K account.
The current public blockfunded rules show 5% daily drawdown and 12% total drawdown for challenge and verification stages. On a 100,000 USDT account, the simplified percentage amounts are:
Five percent of 100,000. The actual live threshold depends on the platform's calculation and reference values.
Twelve percent of 100,000. Treat this as the cumulative outer floor, not as a risk budget.
Example A: one volatile session
A trader opens several correlated long positions. Bitcoin drops quickly and altcoins fall more sharply. Even if each position has a stop, the combined open loss can approach the daily threshold before all orders close. Correlation turns several small-looking trades into one large directional bet.
Example B: slow cumulative decline
A trader loses 2% on one day, 2.5% on another and continues with similar risk. Each session may stay below a 5% daily threshold, but the account moves steadily toward the total drawdown floor. The daily rule has not been breached; the cumulative risk process is still failing.
Example C: profit does not justify unlimited risk
After a profitable period, the trader increases size aggressively. Whether earlier profits create additional room depends on the exact drawdown model. The safe assumption is never to improvise from the headline balance: use the live threshold shown by the account.
How to build a drawdown-aware risk plan.
- Start from the failure thresholds.Record the daily and total limits, reset time and whether open P/L affects the calculation.
- Create a smaller personal daily limit.The buffer protects against volatility, fees, execution delay and emotional decisions.
- Limit combined exposure.BTC, ETH and altcoin positions can be highly correlated. Count the portfolio risk, not only each ticket.
- Reduce size after losses.Trying to recover with larger exposure moves the account toward both drawdown limits faster.
- Watch the account view.Use balance, open P/L, free power and rule status together. A chart alone does not show evaluation risk.
A simple risk plan might risk only a small fraction of the account on one idea, cap the total risk of correlated positions and stop the session well before the platform limit. The exact percentage depends on the strategy and trader; the principle is to preserve decision quality and avoid using the failure line as a target.
Frequently asked questions.
What is the difference between daily and total drawdown?
Daily drawdown limits loss within a defined trading day, while total drawdown limits the cumulative decline allowed across the account or evaluation.
Can open positions affect drawdown?
They can when the platform evaluates current equity or open profit and loss. Follow the live account status and the exact calculation described in the current rules.
Should the platform limit be used as a daily risk target?
No. The platform limit is a failure threshold. A personal risk limit below it creates room for volatility, spread, commission and execution error.
Why is crypto correlation important?
Several crypto positions can move in the same direction at once. What looks like diversification by symbol may still be one concentrated market bet.