Weekly loss limits versus daily: which do you use?
Daily limits stop single-day spirals; weekly limits catch slow bleeds across several middling days. Some traders run both, with the weekly one lower than five times the daily. Others find layered limits too bureaucratic.
What's your structure?
- the limits you run and their values
- how they interact when both are near
- whether they've saved you from a spiral
The drawdown guide explains the compounding maths behind them.
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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