Maximum Daily Loss
A fixed percentage ceiling (typically 2%) that stops all trading for the day when reached — prevents revenge trading and catastrophic loss days
The maximum daily loss is a non-negotiable rule: pick a number (2% of your account is standard), and when you hit it, you stop trading. Period. No "one more trade." No "this setup is too good." You are done for the day. This single rule prevents the revenge trading spiral where one loss becomes two, then three, then you increase size to "make it back," and suddenly one day has wiped out two weeks of progress. With a 2% ceiling, you can take two 1% risk trades, four 0.5% trades, or eight 0.25% trades before stopping. The specific number matters less than the commitment. Everything counts toward the limit — realized losses, slippage, commissions. The max daily loss buys you time: instead of a catastrophic loss that takes weeks to recover from, you have a controlled setback that takes 1-2 good days to recover.
✓How to Recognize
- •Set your daily ceiling before trading (2% is standard, 1% for conservative, 3% for experienced)
- •Count everything toward the limit: realized losses, slippage, commissions
- •When you hit it, stop trading immediately — no exceptions, no "one more"
- •Structure daily risk: how many trades at what risk per trade fits within your ceiling
⚡How to Avoid
- →Trading without a daily loss limit (this is how revenge trading spirals happen)
- →Moving the ceiling mid-day because "this setup is different"
- →Not counting slippage or commissions toward the total
- →Increasing position size after losses to "make it back faster"