Setting a Daily or Weekly Loss Limit
A 1-minute lesson from the MarketPro academy, one of 22 in risk management.
A daily or weekly loss limit is a predefined point at which a trader stops trading for that period, regardless of how tempting it feels to keep going. The limit is usually set as a percentage of account balance, decided in advance while calm and unemotional.
A daily or weekly loss limit is a predefined point at which a trader stops trading for that period, regardless of how tempting it feels to keep going.
How It Works
The limit is usually set as a percentage of account balance, decided in advance while calm and unemotional. Once cumulative losses for the day or week reach that threshold, trading stops until the next period begins.
- Limits are set before trading begins, not adjusted mid-session
- Reaching the limit triggers a full stop, not just a pause
- The exact percentage should reflect an amount the trader can absorb without it affecting decision-making elsewhere
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Step 7 of 10 on Risk Management Mastery
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Not investment advice. Past performance is not indicative of future results.