The daily loss limit is 2% of your account balance at the start of the trading day.
It is measured on equity, which means open positions and unrealised losses count towards it, not only closed trades.
The trading day runs from one market reopen to the next, Monday to Friday, and the limit resets at each reopen.
If the limit is breached at any point, that attempt ends, in the same way as a breach of the maximum drawdown limit. You can reset at no cost and start a new attempt.