Daily loss limits: what's your number, and how do you enforce it?
A daily loss limit caps the damage any single day can do. Choosing the number is strategy (too tight chokes normal variance, too loose is decoration); enforcing it is psychology.
Share yours:
- the limit, in R or percentage
- the enforcement mechanism that actually works
- the day you hit it and what happened next
The drawdown guide helps pick a number that fits your win rate.
Background: Drawdown and recovery: why a 50% loss needs a 100% gain
Losses and gains aren't symmetrical. See how much you need to recover from a drawdown, what losing streaks do at different risk levels and how to set limits.
How much do you need to gain to recover from a 50% loss?
100%. The gain needed is the loss divided by one minus the loss, so larger drawdowns need disproportionately larger gains.
What is maximum drawdown?
The largest fall in account value from a peak to a later low, before a new peak is reached, usually expressed as a percentage.
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