What Is MLL in Trading? Maximum Loss Limit Explained
The Maximum Loss Limit (MLL) is the lowest level your account equity can reach before the account breaches. At FXIFY, this limit is called the…
The Maximum Loss Limit (MLL) is the lowest level your account equity can reach before the account breaches. At FXIFY, this limit is called the maximum drawdown. Each FXIFY program has its own limit.
This guide explains how the Maximum Loss Limit works. It also shows how it differs from the Daily Loss Limit, and how static and trailing drawdown move.
Key Terms
| Term | Meaning |
|---|---|
| Maximum Loss Limit (MLL) | The total loss allowed over the life of the account. FXIFY calls it maximum drawdown. |
| Daily Loss Limit | The loss allowed in one trading day. It resets at 5 PM EST. |
| Loss allowance | How much you can lose, in dollars, before you reach the limit. |
| Breach level | The equity level where the limit is reached. |
| Static drawdown | A floor set from the starting balance. It does not move. |
| Trailing drawdown | A floor that moves up with the highest closed balance, then locks. |
| Highest closed balance | The highest balance the account has reached from closed trades only. |
| Equity | Your balance plus or minus the profit or loss on open trades. |
How the Maximum Loss Limit Works
The MLL is a floor under your account. Your equity cannot go below this floor at any time. Equity includes open trades, so a floating loss counts.
Two numbers matter here. The loss allowance is how much you can lose. The breach level is the equity level where the limit is reached. They are not the same number.
Here is an example. A $100,000 account has an 8% static MLL. The loss allowance is $8,000. The breach level is $92,000.
If equity reaches the breach level, the account has a hard breach. The account then fails.
Maximum Loss Limit vs Daily Loss Limit
These are two separate limits. Both apply at the same time.
The Daily Loss Limit resets each trading day at 5 PM EST. It is a percentage of the account balance at the end of the prior day. It is checked against your live equity. This means losses on open trades count toward it.
Hitting the Daily Loss Limit can also breach the account. On the Lightning program, for example, hitting the 3% daily limit breaches the account.
The Maximum Loss Limit covers the whole life of the account. It does not reset each day. Losses from many trading days add up toward it.
Here is an example. You stay inside the Daily Loss Limit for five days in a row. Each day ends with a small loss. Those small losses still add up. Over time, they can bring equity down to the MLL floor.
Static and Trailing Drawdown on FXIFY Programs
FXIFY uses two drawdown types. The type depends on the program you choose. This table shows the limits for each program.
| Program | Drawdown type | Daily Loss Limit | Maximum Loss Limit |
|---|---|---|---|
| One Phase | Trailing | 3% | 6% |
| Two Phase Standard | Trailing | 4% | 10% |
| Two Phase Classic | Static | 4% | 10% |
| Two Phase Pro | Static | 4% | 8% |
| Three Phase | Static | 5% | 5% |
| Instant Funding | Trailing | 8% | 8% |
| Lightning | Trailing | 3% | 4% |
You can see the full rules for each one on the FXIFY programs page.
Static Drawdown
Static drawdown is measured from the starting balance. The floor stays at the same level for the life of the account. It does not move up when you make a profit.
Here is an example on Two Phase Pro. The account starts at $100,000 with an 8% static limit. The breach level is $92,000. The balance then grows to $106,000. The breach level stays at $92,000. The gap between your balance and the floor is now $14,000.
Two Phase Classic, Two Phase Pro and Three Phase use static drawdown. You can read more in the static drawdown FAQ.
Trailing Drawdown
Trailing drawdown tracks the highest closed balance. Only closed trades move the floor up. Profit on open trades does not move it.
The trail distance is set from the starting balance. On a $100,000 account with a 10% limit, the trail distance is $10,000. That dollar amount stays the same as the floor moves up.
Here is an example on Two Phase Standard. The account starts at $100,000 with a 10% trailing limit. The breach level is $90,000. The highest closed balance then rises to $104,000. The breach level moves up to $94,000.
The floor does not trail forever. Once profit reaches the program’s drawdown percentage, the floor locks at the starting balance. On this account, that happens at $110,000. The floor also locks at the starting balance when a payout is processed. After it locks, it stays there.
One Phase, Two Phase Standard, Instant Funding and Lightning use trailing drawdown. You can read more in the trailing drawdown FAQ.
Managing Risk Around Your Maximum Loss Limit
The ideas below are general education. They are not personal trading advice.
Size trades from the loss allowance
Your loss allowance is the money you can lose before a breach. On a $100,000 account with an 8% limit, that is $8,000. Sizing trades from the $8,000 shows how many losses the account can take.
Check the cost of each loss
Risk per trade changes how many losses fit inside the allowance. With an 8% limit, losing 2% per trade uses the full allowance in four losing trades. Losing 0.5% per trade takes 16 losing trades.
Smaller risk per trade gives you more room. It does not remove the chance of loss.
Watch your open losses
Both limits are checked against equity. A large open loss can reach a limit before you close the trade. A stop-loss order sets your exit price in advance. In fast markets, a stop-loss can still fill at a worse price.
Know your program before you start
Check three things for your program. Look at the drawdown type, the Daily Loss Limit and the Maximum Loss Limit. Then pick the program that fits how you trade.
The Maximum Loss Limit sets the lowest point your equity can reach. Know where your floor sits, and know whether it moves. Then size each trade from your loss allowance.
Frequently Asked Questions
What happens if I hit my Maximum Loss Limit?
The account has a hard breach and fails. In a funded account, profits on the account at that time are not paid out. The Performance Protect add-on changes this. You can read the details in the hard breach FAQ.
Does the Maximum Loss Limit count open trades?
Yes. The breach check uses equity, so open losses count. Open profit does not move a trailing floor up. Only the highest closed balance moves it.
Which FXIFY programs use static drawdown?
Two Phase Classic (10%), Two Phase Pro (8%) and Three Phase (5%) use static drawdown.
Which FXIFY programs use trailing drawdown?
One Phase (6%), Two Phase Standard (10%), Instant Funding (8%) and Lightning (4%) use trailing drawdown.
Can the floor ever move down?
No. On static accounts, the floor stays at one level. On trailing accounts, the floor only moves up. It then locks at the starting balance.
How is the Daily Loss Limit calculated?
It resets each trading day at 5 PM EST. It is a percentage of the account balance at the end of the prior day. It is checked against live equity. The Maximum Loss Limit does not reset.
