Sign inCreate account
← Strategy library

Daily Loss Limit and Trade Capthe two numbers that end bad days

Evidence: ModerateBeginnerRisk · Behavioural

Two limits, both checked automatically: a maximum loss for the day, and a maximum number of trades for the day. Either one is reached and the platform is closed until tomorrow.

Neither improves any strategy's expectancy. What they do is remove the specific sequence that produces most catastrophic retail losses — a loss, then a larger trade to recover it, then a larger one still. That sequence is not a strategy failure and no entry rule prevents it.

This is a sizing rule, not a trade. It sits on top of whatever entries you run, and its effect is on the shape of the equity curve rather than on whether any individual trade wins.

Applies to
Every account · non-negotiable for discretionary intraday trading
Timeframe
Any · a daily limit, reset at your own session boundary
Typical setting
Daily loss 2%–3% of the account · trade cap set from your own tested average, not from ambition
Enforcement
Automatic. A limit you enforce by willpower is not a limit.
Tools
An EA or platform rule that closes positions and blocks new orders

Valid setup

RK-06 · DAILY LOSS LIMIT AND TRADE CAP — ACCOUNT EQUITY the bad day, stopped at three losses — the version without the limit is the one that does not appear on this chart EQUITY 96.0 97.1 98.2 99.3 100.5 101.6 102.7 ORDINARY DAYS THREE LOSSES — DAY OVER, PLATFORM CLOSED NEXT SESSION, FULL SIZE, NOTHING TO RECOVER FROM starting balance DAILY LOSS LIMIT = 3 × the per-trade risk 1 2 3 4 bad day starts limit fires 100.0 97.0 ① First loss. Nothing unusual — this happens weekly ② Second. This is where the recovery trade normally appears ③ Third: the limit fires and the platform closes ④ Next session opens at full size ⑤ Enforced in code, never by willpower ⑥ It stops some days that would have recovered. Fine

Exact rules

When it applies

  • Set the daily loss limit at roughly three times your per-trade risk. At 1% per trade that is 3% — three full losses and the day is over.
  • Set the trade cap from your own records: count the trades per day in your profitable months and use that number, not the one from your worst month.
  • Enforce both in code. Every trader believes they will follow this manually and the data on that is not ambiguous.
  • Reset at a fixed session boundary, and never move the boundary to get another day.

The risk cap

  • Per-trade stops are unchanged. These limits sit above them.
  • When the daily limit fires, close open positions too — a limit that only blocks new orders leaves the worst position open.
  • Add a weekly limit at roughly twice the daily one. Five bad days in a row is a different problem from one bad day.

Sizing and review

  • Log every day the limit fired and what happened in the hour before it. The pattern is usually the same two or three situations.
  • A limit that fires most weeks means the size or the strategy is wrong, and the limit is treating a symptom.
  • A limit that has never fired in a year is set too wide to be doing anything.

Build Daily Loss Limit and Trade Cap

Reading this page is free and always will be. Taking it is what costs — the complete MQL5 for the rules above, yours to keep, permanently. Five of them cost $10 and they never expire.

Sign inWhat it costs

More from Risk & position sizing

Fixed Fractional Riskthe same percentage every timeVolatility-Parity Sizingequal risk, not equal lotsFractional Kellythe optimal size, and why nobody trades it

Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.