What is the recommended way to handle scheduled sequence number resets (initiated by the counterparty once per day) ?
Sequence Number Reset depends on FIX engine configuration. If you have FIX initiator you can set "ResetOnLogon=N", so that your acceptor will keep track of sequence number. In case of sequence number mismatch, both counterparty/FIX engine will replay messages that were lost.
If you have Acceptor at your end, then you can ask counterparty(initiator) FIX engine to keep "ResetOnLogon=N".
Refer this link.