A daily loss limit is a rule that ends trading when the planned amount of risk for the day has been used. It is not proof that you failed. It prevents a difficult session from becoming a larger decision-quality problem.
Make the rule objective
Define the amount in advance and include commissions, slippage, or whatever account metric you use. Avoid rules like “stop when I feel bad” because tilt rarely feels obvious in the moment.
Add a review step
When the limit is hit, record whether losses were normal variance, poor execution, or rule breaks. This creates a pause between the loss and the urge to recover it. That pause is the opposite of why the next revenge trade feels urgent.
Use the next session only after you can state the plan without trying to erase yesterday’s PnL.
