3 min read · educational content, not investment advice
A bad day is not a problem. A bad day that continues after the third stop-out is a problem. Circuit breakers exist for exactly that moment.
Set four numbers
Risk per trade — e.g. 1% of the account
Daily loss limit — e.g. 3%. Hit it, the day is over.
Weekly loss limit — e.g. 6%. Hit it, you are flat until Monday.
Losing-streak stop — e.g. three losers in a row ends the session
Why a loss limit works
Losses do not only remove capital; they change your decision-making. The third loss in a row is rarely taken with the same discipline as the first. A limit is not about protecting three percent — it is about protecting the state of mind that produced your good trades.
The rule for the next session
Log the trades and write one line on what changed in your execution.
No new positions until the next session.
First trade of the next session at half size.
Fill in your own numbers in the risk manager — it will tell you when you have hit the limit, before you have to decide.