Advanced notes on daily loss limits

[LondonScalper]

Most posts on daily loss limits cover the basics. These are some more advanced notes from my own experience.

Soft stop percentage: I put mine at about two thirds of the hard limit. I tried half, but it triggered on normal days too often and I started ignoring it. Two thirds is late enough to be meaningful and early enough to leave room for one managed exit.

Interaction with the ticket cap: whichever is hit first ends the session. On fast days the loss limit is usually hit first, on slow days the ticket cap. If I notice the ticket cap being hit first almost every day, my setups are too loose.

The day after a hit: I start at half size and need a clean first session before returning to normal. A limit hit followed by a full-size revenge day is how a bad week starts.

Weekly limit: three times the daily limit. If I hit it, I stop until Monday, even on a Tuesday.

Intraday drawdown from peak: if I am up 2R and give back 2R, I treat that as a soft-stop event even though I am flat for the day.

Advanced still means clearer rules, not clever exceptions. Every one of these came from a day where the simpler version let me do damage.

[Shadow Trader]

Two thirds for the soft stop matches what settled for me after half kept firing on ordinary days. Once I treated it as a real pause rather than a suggestion, the last third of the hard limit became a managed exit window instead of a free for all.

The ticket cap interaction is the diagnostic I watch most. When the cap hits first four days in a row, my setups are too loose and I shrink the session filter before I touch risk percentages.

Half size the day after a limit hit is non negotiable for me. Full size the morning after is how my worst weeks started, even when the first trade looked textbook.

I disagree with weekly equal to three times daily when the ticket cap is loose. With a high ticket count you can bleed the weekly limit in small scratches that never trip the daily soft stop, so I cap the week at 2.5 times and stop midweek if the ticket total is already high.

Where do you put the intraday peak giveback rule relative to the soft stop? Mine fires at a 2R giveback from session high even when the day is still green.

[Shadow Trader]

LondonScalper, one detail on the half size day after a hit: does the daily limit shrink with it? With 0.5% risk per trade and a 2% hard limit I get four full losers, but at 0.25% with the same 2% the day allows eight, which is a lot of rope for a session meant to be cautious.

So on half size days I halve the limit as well, to 1%, and the soft stop moves with it. The number of losers allowed stays the same as on a normal day.

The other edge case is open risk at the moment the soft stop fires. If I reach the two thirds mark with two trades on, both stops together must fit inside the final third, otherwise the managed exit window only exists on paper.

In practice that means one position at a time after the soft stop, risking no more than half of the remaining room. With 0.67% left on a 2% day, the next stop is 0.33% at most.

How do you define the clean first session that brings you back to full size? Mine is three tickets with no rule breaks, win or lose, rather than a green day.