Daily Loss Limits
Most of the damage in a bad trading day doesn’t come from the first loss. It comes from what happens after it, when a trader tries to win the loss back and takes trades they wouldn’t normally take on a calmer day. Why the limit exists A daily loss limit interrupts that pattern. Once losses for the day hit a number decided in advance, trading stops for the day regardless of how good the next setup looks, because the state of mind that follows a string of losses makes “how good it looks” an unreliable judge in the first place. ...