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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)
Trading Apprentice
Toronto,Canada
 
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Platform: ninjatrader
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Daily P/L risk limit by brokers/psychological pros & Cons

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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  #2 (permalink)
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  #3 (permalink)
 Vendor: www.traderwerks.com 
Taipei Taiwan
 
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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)
Market Wizard
Boca Raton
 
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We typically set that for an X account balance instead of a per trade.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #5 (permalink)
 Vendor: www.traderwerks.com 
Taipei Taiwan
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: Optimus
Favorite Futures: TW
 
Posts: 693 since Jun 2009
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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 )

Math. A gateway drug to reality.
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  #6 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
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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

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.

Last edited by mattz; August 19th, 2013 at 12:00 AM. Reason: further details
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  #7 (permalink)
 Vendor: www.traderwerks.com 
Taipei Taiwan
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: Optimus
Favorite Futures: TW
 
Posts: 693 since Jun 2009
Thanks: 440 given, 440 received


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?

Math. A gateway drug to reality.

Last edited by traderwerks; August 19th, 2013 at 01:32 AM. Reason: TMI
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