The whole rulebook of a Daily Funded Session is one line: your equity must not fall 7% below its high-water mark for the session. On a $10,000 account that is a $700 cushion; on $50,000 it is $3,500. Touch it and the session ends. Nothing else can fail your day. Understanding exactly how the line moves is worth more than any setup, because a strong day that breaches on a careless third trade still counts as a breach.
It trails your high, it does not sit still
The line is measured from the highest equity your session has reached, not from where you started. Start at $10,000, run the account up to $10,400, and the 7% line now sits 7% below $10,400, not below $10,000. This matters both ways. Early on, the cushion is measured from your starting balance, so you have the full 7% to work with. Once you are up on the day, the line has risen with you, which protects your gains but also means giving a big winner all the way back can put you closer to a breach than you expect.
Why 7% and not less
Seven percent is deliberately generous for a single day. A day trader risking the standard 1% per trade would have to lose seven trades in a row, with no winners in between, to come close, which almost never happens inside a disciplined session. The line is not there to catch normal trading. It is there to end the sessions where someone has abandoned their plan and is sizing up to force a result. If you are anywhere near the line on an ordinary day, the position size, not the market, is the problem.
Trading with the line, not against it
Practically, the line rewards two habits. First, size so that a normal losing streak cannot reach it: at 1% risk per trade the 7% cushion is close to untouchable. Second, protect a running profit before adding risk, because once you are up, the line has moved up too. A trader who books partial profit and tightens up after a strong morning is not being timid. They are keeping distance from the only line that can end their day.