Why was my account breached in profit?

You closed the day up. The dashboard says the account is gone. Nothing in the two facts contradicts the other, and the reason is a detail almost no rule summary states plainly: the floor and the test do not run on the same clock.

WHAT THIS IS — AND WHAT IS NOT PUBLISHED. This article is method. I have measured and published nothing about prop-firm outcomes — no pass rates, no breach frequencies, no firm-by-firm comparison — and no such figure appears on this page. This page names no firm and describes no firm’s terms. Rules differ between firms and between programmes at the same firm; where this page and your rule document disagree, your rule document is the fact. Status of my own measurements: NOT YET COMPUTED. Hadal carries no affiliate links and takes no commission from any firm.

A limit has three parts, and only one of them gets advertised

Any loss limit of this shape is built from three separate decisions, and rule summaries usually describe the first while leaving the other two implicit.

• The anchor. What the floor is measured from — a starting balance, a high-water mark, yesterday’s close.
• The update schedule. When the anchor is allowed to move. Continuously as equity makes new highs, or once a day at a stated clock time, or never.
• The test frequency. How often your account is compared against the floor. Continuously through the session, or once at the close.

The advertised number — the allowance — tells you the distance between the anchor and the floor. It tells you nothing about the other two, and the other two are where surprising breaches live.

The asymmetric clock

Here is the combination that produces the outcome you are looking at. The anchor updates on a coarse schedule and the test runs on a fine one.

Your floor is set from a daily sample — yesterday’s closing balance, say. It does not move during the session no matter how well the day goes. But the comparison between your account and that floor is running continuously, and in many rule sets it is run against your equity, which includes open positions, rather than against your closed balance.

So an unrealised excursion during the session can put your equity below a floor that your closing balance ends the day comfortably above. The test fires at the moment it happens. The close comes later and changes nothing, because the breach has already been recorded.

That is the asymmetric clock: the floor is sampled slowly, the account is judged quickly, and the gap between the two sampling rates is the exposure nobody quotes.

The worked case

The following numbers are hypothetical and are here to show the arithmetic, not to describe any product.

Take an account with a floor of 49,500 — set from a previous daily close, and fixed for today. Through the session an open position drifts against you and equity touches 49,300 before recovering. You close the position in profit and the day ends at 50,400.

Two facts, both true:

• At the close you were 900 above the floor.
• Intraday you were 200 below it, and that is the number the test saw.

The account ended at the moment equity touched 49,300. Everything after that is a record of an account that had already stopped.

Why the forced exit can make the final number look even better

There is a second-order effect worth knowing, because it makes the outcome look more absurd than it is. Where a breach triggers an automatic liquidation, the fill you get is the fill the market offers at that moment — and slippage can be favourable as easily as adverse.

A forced exit that fills better than the trigger price can leave your final realised balance above the limit. The breach still stands. It was recorded when the test fired, on the equity that existed then, and a subsequent good fill does not reach back and unrecord it.

What to check in your own document, in this order

1. Is the test run on balance or on equity? If it reads equity, unrealised movement can breach you. This single word is the difference between the outcome above and no outcome at all.
2. When does the anchor move? Continuously with new highs, once a day at a stated time, or never. A stated time is a timezone question as much as a clock question.
3. How often is the test run? Continuously, or once at the close. Coarse anchor plus fine test is the combination on this page.
4. Does the floor ever stop rising? Some rules stop the ratchet once the floor reaches the starting balance. Others state no ceiling.

Where your document does not answer one of these, that silence is itself a finding, and it is worth putting to the firm in writing before you rely on either reading.

The related arithmetic is on the trailing drawdown calculator, and the term itself is defined at trailing drawdown.