Have A Daily Loss Limit

What Is Daily Loss Limit in Trading?

A daiily loss limit is a mental decision not to lose a specific amount of money each day when you trade. It is not a process you can automate, so you have to have the discipline to stick to it and that is usually the difficult part. Your daily loss limit is an amount of money you can afford to lose without feeling overly bad about your self.

A daily loss limit stops you from self-destruvting & blowing your account when your having a bad day. There will be some days when nothing works even your most tested strategy, and you may feel the urge to keep trading and adding to your losses.

How Much Should Your Daily Loss Limit Be?

Most profitable traders use a 10% daily loss limit but you should choose a limit that you are comfortable with.

What To Do When You Reach Your Daily Loss Limit

1. Withdraw Your Remaining Funds

To avoid the temptation of wanting to revenge trade, you could withdraw any reminaing funds in your trading account. To effectively do this, you should ensure that your broker has a low minimum withdrawal limit, before you decide to open an account with them.

2. Shut Down & Engage in Other Activity

Sometimes you just need to shut down your computer and go our to engage in some other activity whenever you reach your daily loss limit. Remaining in front of the screen could cause you to want to revenge trade & try to recover your losses. You could try to engage in other activity such as playing a game, watching a movie, or taking a walk etc.