What it Means:
Your Net P&L cannot hit or exceed the Daily Loss Limit at any point during the trading day (5:00 PM CT-3:10 PM CT). If at any time your Net P&L does exceed this amount for your account, any open trading positions may be flattened, any pending orders may be canceled, and your account may be prevented from placing any new trades until the start of the next trading day (5:00 PM CT). The account automatically becomes ineligible for funding once the Daily Loss Limit is exceeded.
For example, in a $150K Trading Combine, the Daily Loss Limit is $3,000. Therefore, if at any point during the trading day your Net P&L hits or exceeds -$3,000, the Daily Loss Limit is considered hit.
The Daily Loss Limit is factored based on each trading day’s Net P&L, which includes simulated commissions, fees, and both unrealized and realized trade P&L values.
We recommend that all NinjaTrader users utilize the R|Trader platform in order to accurately monitor their Net P&L.
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 day, a bad day (we all have them)
- It allows you to live to trade another day, the markets will be there tomorrow
- Losses can be emotional, emotions affect decision making