1
Daily stop
Maximum realized plus open loss allowed during one session.
Lesson · Trading Risk Management
Daily and Weekly Risk Limits
Use hard session and weekly limits to stop adding exposure after losses, execution errors, or unfavorable market conditions.
Core concepts
What to understand
Keep the process direct: define the risk, calculate it, and enforce the limit.
2
Weekly stop
A larger limit that prevents repeated daily damage from compounding.
3
Behavioral control
Limits reduce revenge trading, size escalation, and rule changes under pressure.
Interactive lab
Change the risk conditions
Adjust the controls and read the market behavior and account impact after each change.
Daily and Weekly Risk Limits Lab
Synthetic educational data · no live market connection
RISK MODEL
Risk process
Apply it in order
Risk calculations should happen before the order is submitted.
Define the stop before trading
The limit must be fixed before the first outcome.
Count all losses
Include realized loss, open risk, fees, and execution mistakes.
Require a review
Resume only after the defined reset period and process review.
Knowledge check
Check your understanding
Select one answer for each question. Feedback appears immediately.
1. The daily loss limit is reached. What should happen?
A hard limit only works when new exposure stops immediately.
2. Should one winner reset a previously reached daily limit?
Resetting after a winner defeats the purpose of capping the day’s damage and behavior risk.
3. What should count toward the limit?
The account remains exposed to active stops, so open risk must be included.
4. Daily limit 3R, risk 1R per trade. Realized −1.5R, open risk 1R to current stops. Can a new 1R trade be opened?
3R − 1.5R realized − 1R open = 0.5R of the limit left; a 1R trade does not fit. Either a 0.5R trade fits, or nothing does until an open stop is moved to entry.
Practical rules
- Use hard limits with no discretionary override.
- Include open risk and costs in limit consumption.
- Record why the limit was reached before the next session.
Common mistakes
- Taking a recovery trade after the limit.
- Increasing size after consecutive losses.
- Changing the limit during the session.
References
Official reading
The labs use simplified synthetic examples. These sources cover the underlying risk and execution concepts.
CME Group · The 2% Rule
Strict loss parameters provide structure for trading decisions.
FINRA · Frequent Intraday Trading
Frequent trading, particularly with margin, carries substantial loss risk.