A maximum loss limit is the total loss an account may take from its starting balance before it breaches. It is separate from the daily loss limit, which only covers one day. A trader can stay inside the daily limit every single day and still breach the account by adding small losses together until the total limit is reached.
The limit is usually a percentage of the starting balance. On a $100,000 account with a 10% maximum loss, the floor is $90,000. Some firms keep that floor fixed, while others let it trail upward as the account grows. The firms we track use both styles, so the same 10% figure can mean two different floors.
This rule matters because it sets the real size of the risk you are taking. A 10% limit on a $100,000 account means $10,000 of total room, no matter how many trades or days you spread it across. Once the room is gone, the account is gone too, even if your last trade was small.
The common trap is confusing the maximum loss with the daily loss. A trader who loses 4% a day for three days has lost 12% in total and breached a 10% maximum loss, even though no single day broke a 5% daily limit. Track both numbers, and check whether the floor is fixed or trailing on the rules page before you buy. Prop trading can cost you every fee you pay.