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Daily P/L risk limit by brokers/psychological pros & Cons


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Daily P/L risk limit by brokers/psychological pros & Cons

  #1 (permalink)
 Guss   is a Vendor
 
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Hi all,
Any traders have experience or familiar with any broker that offers a daily risk limit based on on either $$$ or % of account, where once hit it limits access to your account?
How reliable is that, and what are the psychological pros/cons ?

Any feedback is highly appreciated

Regards
Guss

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  #3 (permalink)
 traderwerks   is a Vendor
 
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Guss View Post
Hi all,
Any traders have experience or familiar with any broker that offers a daily risk limit based on on either $$$ or % of account, where once hit it limits access to your account?
How reliable is that, and what are the psychological pros/cons ?

Any feedback is highly appreciated

Regards
Guss

deepdiscounttrading can set a dollar limit for closed trades, where you cannot enter opening orders after you hit the limit.

Math. A gateway drug to reality.
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  #4 (permalink)
 
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 mattz   is a Vendor
 
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We typically set that for an X account balance instead of a per trade.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #5 (permalink)
 traderwerks   is a Vendor
 
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mattz View Post
We typically set that for an X account balance instead of a per trade.

Sorry, that is what I meant. If you lose X dollars on the account balance on closed trades the limit kicks in.

I personally think it is a good idea. Especially if you are trading automated and your system does something un expected (think Knight trading )

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traderwerks View Post
Sorry, that is what I meant. If you lose X dollars on the account balance on closed trades the limit kicks in.

I personally think it is a good idea. Especially if you are trading automated and your system does something un expected (think Knight trading )

It amazes me that no one talks about the downside of this as well and there is one.
If the exchange fires a "misquote" which happens once in a blue moon,
you positions are closed automatically. The P&L is calculated a result of price, therefore we don't recommend setting it to daily losses, but overall account balance.
The misquote could also happened as a result of the quote vendor, not only exchange.

Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
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  #7 (permalink)
 traderwerks   is a Vendor
 
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mattz View Post
It amazes me that no one talks about the downside of this as well and there is one.
If the exchange fires a "misquote" which happens once in a blue moon,
you positions are closed automatically. The P&L is calculated a result of price, therefore we don't recommend setting it to daily losses, but overall account balance.
The misquote could also happened as a result of the quote vendor, not only exchange.

Matt

You are right, I think there should be a lot more talk about this. I think firms use a lot of ways to manage risk, so a discussion with your broker is probably the best way. So @mattz, what are some other things traders should look out for in setting daily stop loss limits?

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