Who this is for — To know when to stop before the day or the trade becomes a disaster. It is the beginning trader's circuit breaker.
The maximum loss is the threshold beyond which you stop operating: on a single trade, a session, or a week. It is not pessimism — it is operational discipline.
In plain terms — risk-per-trade limits one position. The daily maximum loss limits the sum of positions and emotional decisions of the day ("one more trade to break even").
Three levels of limit
| Level | Example | Effect |
|---|---|---|
| Per trade | = risk per trade (e.g. 1% capital) | Stop respected = loss bounded |
| Daily | e.g. −2% or −3% equity in one day | Close platform, no revenge |
| Weekly | e.g. −5% equity | Pause, review, no new setups until Monday |
At Bronze you only need to define at least a per-trade limit and a written daily limit. At Silver it becomes the maximum daily risk in the trading plan.
Example — Account 10,000, 1% risk per trade (100), daily limit −2% (200). After two full stops (−200) the rule says: done for today. The third "recovery" trade is often the one that turns −2% into −8%.
Maximum loss and psychology
Breaching the limit "just this once" trains the brain to ignore rules. Respecting it trains the process — even when the market "seemed" to give one last chance.
Card
- What it is: loss ceiling beyond which you stop operating (trade / day / week).
- When to use it: before starting the session; to be respected without negotiation.
- Typical mistake: limit written but never applied after a losing streak.
Bronze path — Module: Risk before profit. Part of bronze-path.
Links
Module: Module 4 — Risk before profit
The first skill of a trader is survival.
