What it Means:
- Your Net P&L cannot hit or exceed the Weekly Loss Limit at any point during the trading week (Sunday 4:00 PM CT- Friday 3:45 PM CT). The Weekly Loss Limit is based on your account equity as of the prior Friday after the close of trade and is automatically calculated on your dashboard here.
- In Step 1, the Weekly Loss Limit is $2,000 for the $300,000 Combine. If at the close of trading on Friday, your account balance was $4,500 ($1,500 in profits that week), your Weekly Loss Limit for the following week would be set at $2,500. If at any point during that week, your equity slipped below $2,500, you would violate the Weekly Loss Limit.
- The Weekly Loss Limit is especially important during Step 2 when it shrinks the maximum loss in any given week for all accounts. This goes down to $1,000 for the $300,000 Trading Combine. If we use the example above where you grew your equity to $4,500 on Friday at 3:45 PM CT, then your balance would not be able to dip below $3,500 at any point during the following week.
- The Weekly Loss Limit is factored based on each trading day’s realized and unrealized P&L. If your account falls below the Weekly Loss Limit, any open trades will be auto-liquidated and your account will become ineligible for funding.
Why it is Important:
- Adhering to a loss limit instills discipline and proper risk management.
- At a certain point, you need to call a bad week, a bad week (we all have them).
- It allows you to live to trade another day or week; the markets will be there tomorrow.
- Losses can be emotional, and emotions affect decision making.