Most traders have a daily loss limit. Fewer have one that survives the afternoon they are down and sure the next trade will fix it. A limit you can change while you are losing is not a limit. Three things make one hold.
1. Set it before the session, in R
Decide the number the night before, when nothing is at stake. Express it in units of risk, so it scales with your size. If you risk $100 a trade, a limit of 3R is $300.
A count of losses works as well as a dollar figure: three losing trades and the day is over. Add a pause after any loss, for example thirty minutes, so the next trade is not a reaction to the last one.
2. Hitting it ends the session
The limit has to do something. A promise to yourself is the weakest version. Stronger versions, in order:
- Close the trading platform and leave the desk.
- Use the loss limit your broker or platform offers, if it has one, so new orders are refused.
- Tell another person the number, and tell them when you hit it.
3. Tighten any time, loosen only tomorrow
This is the part that is usually missing. If the limit can be raised at two in the afternoon, it will be, by the version of you that is down and convinced. Make the rule one-directional: you may make the limit stricter whenever you like, but a looser limit only takes effect at the next session.
What the arithmetic says
Three losses at 1% of the account cost about 3%. That is a bad day and nothing more. The damage comes from the trades taken after the limit, which are usually larger and less planned. The limit exists to remove those trades, not to stop you losing.
Where a tool helps, and where it does not
Session Guard in this app locks the New Trade form when your limit is hit, and it will not let you loosen a limit until the next session. To trade through it you have to type a sentence saying you are breaking your own rule and give a reason, and both are kept in a permanent log.
It locks its own form. It does not control your broker, so it cannot stop an order placed there. Use it together with your broker's own limit if one is available.
The rule: set the day's limit the night before, in R. Hitting it ends the session. It can be tightened at any time and loosened only for tomorrow.