What are your thoughts on having a daily loss limit? Is it a good idea? For me, it means you have to be lucky to get your winning and losing trades in the right sequence, so that you do not hit a usually very tight daily stop. In some firms I know of, daily stop is equivalent to 5 points on ES or 8 ticks on ZN, if you use your maximum size. But it also potentially allows you to have quite frequent winning days that are 2-3x your daily stop. In that sense, if you treat one day as one risk unit, you can achieve good reward to risk over long run.
I assume you are talking about the online prop firms. However I think the question shouldn't be is a daily loss limit a good thing, but rather is using the maximum allowed size a good thing. The answer to that question in most instances would be: absolutely not. Slow but steady wins the race
pure and simple if you have to use a stop you're not a confident trader you're more of a gambler relying on more luck than technique. for most everyone who trades they are all gamblers they have no clue about understanding the eb and flow of the markets. neither can they accept the risk of trading or much else in life for that matter. pick one - you can focus on making money or you can focus on controlling risk but impossible to perfect both.
And if you don't use a stop you will eventually suffer a big loss. Or end up holding positions that are underwater forever.
Take more control of your trading. Sequences just don't happen. You control the exit and entry. If you don't have multiple ways (criteria) for Entry and Exit, your trading is naive at best. E.g. consider having several categories of exits: How the trade is going, how the PA is going, Time of Day, and lastly, a daily goal-loss. None are absolute, but more guidelines* Simply adjust your criteria, up to a point, to manage your PL on a daily basis. The goal is to make the most money with the least risk. This includes managing when you entry and exit, not just throw the dice whenever and see what happens. A lot of people trade and just want to "see what happens" for the excitement (entertainment). * of course, an undisciplined trader will make a hot mess of these!
Good Morning PBS, If you worked at my Hedge Fund, I will FIRE you if you EVER stop trading before 3pm because of some silly daily loss limit. Get at your desk and trade and get us rich. Get this silly risk management and daily stop child's play outta here. Grow up! ONLY stop trading when the PnL shows +$X,XXX to +$XX,XXX Just think about it, a daily loss limit is rule to stop making money. Why on earth would you want that. MY JOB IS TO CLICK FROM 8:30am to 3pm, ALL DAY, 5 days a WEEK!!!!