“Breach” is the word every funded trader dreads, but it’s often misunderstood. A breach is simply the firm’s system detecting that you crossed a hard limit. What happens next depends on whether you’re on an evaluation or a funded account — and on the firm’s reset policy. This guide explains it plainly.
Educational content only, not financial advice. Confirm each firm’s exact breach and reset rules on its official website.
What a breach actually is
A breach happens when you cross a rule the firm treats as non-negotiable, most commonly:
- Exceeding the maximum drawdown (overall loss limit).
- Exceeding the daily loss limit.
- Sometimes: prohibited activity (banned strategies, rule violations).
When the system registers a breach, the account is failed or closed. There’s usually no negotiating it after the fact — the limit is automated.
Evaluation breach vs funded breach
The consequences differ:
| Evaluation account | Funded account | |
|---|---|---|
| What ends | That evaluation attempt | The funded account |
| Your money at risk | The evaluation fee | Usually just the account (you don’t owe losses) |
| Common next step | Buy a new attempt or use a reset | Depends on recovery policy |
On most retail prop models you are trading the firm’s capital (or a simulated equivalent), so a funded breach doesn’t mean you personally owe the trading losses — but you do lose the funded account and any unrealised progress.
Can you get a reset or recovery?
This varies a lot:
- Resets — some firms offer free or discounted evaluation resets, letting you restart without buying a full new challenge.
- Funded recovery — a minority offer a path back after a funded breach, often with conditions.
- Nothing — many firms simply fail the account.
Because policies differ, the reset/recovery policy is worth checking before you buy, not after you breach.
The most common causes (and how to avoid them)
- Trailing drawdown on an open position — an unrealised spike moves your limit, then a pullback breaches it. Understand your model first: EOD vs trailing drawdown.
- Daily loss limit — set a personal stop well inside the firm’s daily limit.
- Over-sizing after a good day — sudden size increases cause sudden breaches.
A simple anti-breach checklist
- You know whether your drawdown is static, EOD or intraday
- You have a personal daily stop inside the firm’s daily limit
- You keep position sizing consistent
- You know the firm’s reset/recovery policy in advance
Related reading
Disclaimer: Independent educational content, not affiliated with any firm and not financial advice. Trading leveraged products carries a high risk of loss. Some links may be affiliate links.