Tradeify Crypto Daily Drawdown Explained: How the 3% Rule Actually Works (2026)

Tradeify Crypto's 3% daily drawdown is a hard breach — the moment your account loses 3% of its starting daily balance, the account is permanently terminated with no recovery, no end-of-day forgiveness, and no second chance.

This is the rule that kills more Tradeify Crypto accounts than anything else, and the reason is simple: traders don't understand how it resets, how it interacts with profits from previous days, or how BTC volatility at 5:1 leverage can consume the entire 3% buffer in a single candle.

I nearly learned this the expensive way during my second week when a BTC pullback at 3x leverage ate $580 of my $750 daily budget in about 90 seconds. This guide walks through the exact mechanics, real dollar calculations, and the position sizing discipline that keeps you on the right side of the 3% line.

Learned from live trading: I've been navigating Tradeify's rule structure for over a year on their futures platform and now on Tradeify Crypto since launch. The rule breakdowns here reflect actual trading experience — including where I've come close to breaching and what saved me.

The single most important thing to understand is how the 3% daily drawdown and 6% EOD trailing max loss interact in a 24/7 crypto market — it works differently than futures. I broke it all down with real scenarios and position sizing math in my definitive Tradeify Crypto rules guide. For the absolute latest, check Tradeify Crypto's website or their help center.

How the 3% Daily Drawdown Works

The daily drawdown is calculated as 3% of your account balance at the start of each trading day. That daily reset is the critical detail — the DD budget recalculates based on whatever your balance is when the new day begins, not your original starting balance.

Here's how this plays out in practice on a $25K account:

• Day 1 start: Balance = $25,000. Daily DD limit = $750. Account breaches if equity drops to $24,250.
• Day 1 end: You make $400 profit. New balance = $25,400.
• Day 2 start: Balance = $25,400. Daily DD limit = $762. Account breaches if equity drops to $24,638.
• Day 2 end: You lose $200. New balance = $25,200.
• Day 3 start: Balance = $25,200. Daily DD limit = $756. Account breaches if equity drops to $24,444.

Notice that as your balance grows, the dollar value of your daily DD also grows slightly. At $25,400, your DD budget is $762 instead of $750. That extra $12 doesn't seem like much, but over weeks of profitable trading, the expanding DD buffer creates incrementally more breathing room.

The reverse is also true — after losing days, your next day's DD budget shrinks in dollar terms. Lose $500 one day and your balance drops to $24,500. Tomorrow's DD budget is $735 instead of $750. Losing streaks compress your daily allowance, which is exactly when you need it most.

Hard Breach vs Soft Breach — This Is a Hard Breach

Some prop firms use "soft" daily loss limits — hit the limit and trading is paused for the day, but the account survives. Tradeify Crypto's 3% daily drawdown is not soft. It's a hard breach. Touch the line and the account is gone. Permanently.

This distinction matters enormously for how you trade:

• Soft breach: You can push closer to the limit knowing a bad trade pauses your day but doesn't kill the account. More aggressive intraday strategies are viable.
• Hard breach (Tradeify Crypto): Every dollar of drawdown brings you closer to permanent termination. There's no "well, I'll just get stopped out for the day and try again tomorrow." There is no tomorrow if you hit 3%.

The hard breach mechanic means your real daily DD budget isn't $750 on a $25K account — it's whatever amount you decide you can lose while leaving a safety buffer. I use 60% of the DD as my actual trading budget ($450), leaving 40% ($300) as a buffer for slippage, spread widening, and unexpected moves.

The Dollar Impact by Account Size

The "BTC Move to Breach" columns are the numbers you should tattoo on your brain. At 5:1 max leverage, a 0.6% BTC move ends your day permanently. BTC moves 0.6% roughly every 15-30 minutes during active sessions. At my recommended 1.5x leverage, it takes a 2% BTC move to breach — which typically happens 2-3 times per day during volatile sessions, but is rare within a single trade if you're using proper stops.

How 24/7 Markets Change the Daily DD

On Tradeify Futures, the trading day has a defined start and end. Positions close at 4:59 PM ET, the account resets overnight, and the next trading day begins with a fresh DD budget. Clean, predictable, simple.

Crypto markets never close. Tradeify Crypto still calculates daily DD resets at a specific time (verify the exact reset time on their help center), but the continuous nature of crypto means you could be holding a position through the reset. If you entered a BTC trade at 11 PM and the daily DD resets at midnight, you're now carrying an open position into a new DD calculation period.

This creates a specific risk: a trade that was within your previous day's DD budget could breach the new day's DD if it moves against you after the reset. Let's say you're holding a BTC position that's currently -$400 at 11:55 PM. Your previous day's DD budget was $750, so you're fine. At midnight, the DD resets based on your current balance. If your balance has dropped, the new DD might be $735. That same -$400 position still has $335 of room — but it's a smaller buffer than you had five minutes ago.

My rule for overnight holds: never carry a position through the DD reset with more than 30% of the drawdown consumed. If I'm down $200 approaching the reset, that's fine. If I'm down $400, I close before reset to start the new day with a full budget.

Position Sizing Around the Daily DD

The daily DD is the single most important number for position sizing. Not the profit target, not the trailing max loss — the daily DD. Because the daily DD is the rule most likely to kill your account on any given day.

My formula:

Max risk per trade = 50% of daily DD

On a $25K account: $375 per trade maximum. This allows exactly two full-stop losses before I'm at 100% of the DD — and I stop trading after two consecutive losses, so I never actually reach that point.

Position size = Max risk ÷ (Stop distance × Leverage)

If my BTC stop distance is 1% and I'm using 1.5x leverage, each 1% move costs 1.5% of my position value. At $375 max risk: Position = $375 ÷ 0.015 = $25,000 notional. That's exactly 1x leverage on a $25K account — conservative, survivable, and profitable if the setup works.

The key insight: your leverage should be determined by your stop distance and daily DD, not the other way around. Traders who start with leverage ("I want to use 3x") and then try to fit their stops around it get the math backwards. Start with the DD, work backward to position size.

Five Scenarios That Breach the Daily DD

Understanding what kills accounts prevents you from becoming a statistic:

The double stop-out. First trade stops for -$350. Revenge entry on the same setup, stops for -$400. Total: -$750. Account gone. This is the most common breach pattern — not one catastrophic trade, but two normal losses back-to-back without adjusting size downward after the first loss.

The FOMC surprise. BTC at 3x leverage, hawkish surprise at 2:00 PM. BTC drops 1.5% in 90 seconds. At 3x, that's a 4.5% account hit — $1,125 on a $25K account. Daily DD breached in under two minutes. Solution: reduce to 1x leverage or go flat before scheduled macro events.

The weekend hold gone wrong. You enter a BTC long Friday evening, planning to hold through the weekend. Saturday morning, an exchange hack crashes BTC 3%. Your stop was set at 2%, but slippage on the weekend gap filled you 1% worse. Total loss: 3% × your leverage. At 2x, that's 6% — breaching both the daily DD and the trailing max loss simultaneously.

The altcoin trap. SOL spreads widen to $0.25 during Asian hours. You enter at $180.00, expecting to exit at $181.50. Your market buy fills at $180.25 (spread), SOL drops to $179.00, and your market sell executes at $178.75. The $0.50 in spread costs ($0.25 each way) added to the $1.25 adverse move creates a $1.75 loss per SOL. Multiply by leverage and position size — the spread alone consumed meaningful DD.

The "I'll just hold" mistake. BTC drops $800 against your position. You're down $400 at 2x leverage. Instead of stopping out, you hold, believing it will recover. It drops another $400 before you finally exit. Total loss: $800. The original stop-loss would have been $400. Holding cost you an extra $400 — more than half your daily DD gone because you abandoned your plan.

My Daily DD Checklist

Before every trading session, I run through these items:

• Log today's starting balance and calculate the exact DD dollar amount
• Set the breach level ($24,250 on a $25K starting balance) as a mental hard stop
• Calculate my 60% working budget ($450) and write it on a sticky note next to my screen
• Pre-calculate maximum position size based on my planned stop distance
• Confirm no open positions from overnight that are consuming DD
• Check the economic calendar — if a high-impact event is within my trading window, reduce leverage to 1x

This takes 3 minutes. Three minutes of preparation to protect a $215+ investment. Every trader who says they "didn't have time" for risk checks had time — they just didn't prioritize it.