Daily, Weekly and Monthly Loss Limits: Building a Layered System
Posted: Thu Oct 08, 2026 9:01 pm
A single daily limit stops a bad day. A layered system also protects against a bad week or a bad month.
A practical variant is a trailing daily stop: once the day is up by a certain amount, the stop moves so that only part of that gain can be given back. It protects good days without forcing an early finish.
Example structure:
A practical variant is a trailing daily stop: once the day is up by a certain amount, the stop moves so that only part of that gain can be given back. It protects good days without forcing an early finish.
Example structure:
- Daily: -2% → stop for the day.
- Weekly: -4% → stop until next Monday, review journal.
- Monthly: -8% → reduce size by half for the next month or switch to demo.
- Several "normal" bad days can add up to a serious drawdown if only daily limits exist.
- The weekly review forces a pause to check if the market or the trader changed.
- The monthly rule stops slow bleeding.