# Rules that protect you from yourself > Set a pre-trade checklist, a daily loss limit and breaks after losses, and make them hard to break on a bad day. - Course: [Trading Basics: How It Works, How Not to Lose Everything](https://productovi.com/courses/trading.md) - Module: What if I am the weak link? - Lesson 31/32, ~26 min - Source: https://productovi.com/courses/trading/rules-that-protect-you ## Rules for 11 a.m. **Alex Tutor:** Back on your Pebble practice account, today we write rules for the moments when you're not at your best. **Nora:** I don't need rules. I know what I'm doing. **Alex Tutor:** Everyone does at 9 a.m. The rules are for 11 a.m., after three losses, when the hand moves faster than the head. They're written while calm, so the calm you decides for the upset you. ![Nora rushes at a big phone while Alex sets a low barrier in front of it; Marc holds a ticked checklist under a clock showing eleven.](https://productovi.com/courses/trading/diagrams/m8-l3-scene.png) **Alex Tutor:** Rule one: a **pre-trade checklist**. A few yes-or-no questions before every order. Any "no", and there's no trade. No exceptions, no "just this once". **Marc:** Mine has five. Is today off my no-trade list? Is the entry condition met? Is the stop written down? Is the size computed from my risk? And did my last trade end at least 30 minutes ago? **Nora:** Five questions before every trade? That's slow. **Alex Tutor:** That's the point. A checklist costs thirty seconds. Skipping it can cost far more, as one of your own days will show in a minute. > **Exercise:** Which questions belong on a pre-trade checklist? Pick all that apply. ## The daily loss limit **Alex Tutor:** Rule two: a **daily loss limit**. On a 10,000 account with 1% risk per trade, say 3%: 300 dollars. Hit it, and you're done for the day. App closed. **Nora:** Three hundred is just three losses! **Alex Tutor:** Exactly. Three ordinary losses are a normal day. What comes after them usually isn't. Here's one of your Tuesdays, Nora. **Dataset (CSV):** [Nora's Tuesday](https://productovi.com/datasets/trading/rules-that-protect-you/m8_bad_day.csv) 10,000 practice account, plan risk 100.00 per trade plus 2.00 fees. day_total is the running total for the day. > **Exercise:** With a 300-dollar daily loss limit, after which trade should Nora have stopped for the day? **Alex Tutor:** And now look at what happened instead. Trade 4 at 10:26, six minutes after trade 3, at double the size. Trade 6 at triple. **Nora:** Trade 5 won, though. I was nearly back. **Alex Tutor:** Nearly back is how a 300-dollar day becomes a 900-dollar day. Let's put a number on the limit. > **Exercise:** How many dollars would the daily loss limit have saved Nora on this Tuesday? ## Breaks and cooling off **Marc:** My breaks are simple. After any loss, 30 minutes away from the screen. After two losses in a day, I stop. If the week is down 6%, next week is practice only. **Sofia:** Why a week of practice, not just a day off? **Alex Tutor:** A bad week is often more than bad luck: tiredness, stress, a plan that drifted. Practice keeps the routine going without paying for the mood. And the journal says when the mood has passed. **Nora:** And if I break a rule anyway? **Alex Tutor:** Then log it with the reason, and don't add a second break to fix the first. One broken rule is a lesson. A broken rule followed by a bigger trade is a pattern. > **Exercise:** A daily loss limit works fine if you check it in the evening, after the market closes. **Alex Tutor:** Marc's first break rule is 30 minutes away after any loss. Let's see how Nora's Tuesday looks against it. > **Exercise:** Nora's Tuesday: trades at 09:35, 09:58, 10:20, 10:26, 10:41, 10:52, 11:15 and 11:31; all lost except trade 5 (10:41). How many trades started less than 30 minutes after a losing trade? **Alex Tutor:** Nora's honest question deserves its own answer: what if a rule breaks anyway? > **Exercise:** Nora hit her daily limit after trade 3 and still placed trade 4. What is the best next step? ## Make the rules hard to break **Alex Tutor:** A rule you can break with one click will be broken on the worst day. So make breaking it slow and visible. **Alex Tutor:** Place the stop with the order, never later. If your broker offers a loss-limit or cool-off setting, use it. Print the checklist. Log every break with its reason. Tell someone your limits. **Marc:** Nora, I'll be that someone. Text me before any trade after a loss. If you can't explain it in one sentence, don't place it. **Alex Tutor:** Which of these would actually make Nora's daily limit hard to break? > **Exercise:** Which change makes Nora's daily loss limit hardest to break on a bad day? > **Exercise:** Match each rule with the moment it protects you from. **Alex Tutor:** Now write Nora's rules. She has agreed to try three. > **Exercise:** After her Tuesday (−934.00 on a 10,000 account), write three rules for Nora. Each must be checkable yes or no, and at least one must make breaking it harder. > **A starter set of protective rules** > > 1. **Pre-trade checklist:** no-trade list clear, entry met, stop written and placed with the order, size from risk, last trade ended 30+ minutes ago. Any "no" = no trade. > 2. **Daily loss limit:** e.g. 3% of the account. Reached = done for the day, app closed. > 3. **Pause after a loss:** 30 minutes away from the screen; the next trade at plan size, never bigger. > 4. **Weekly stop:** e.g. down 6% in a week = practice only next week. > 5. **Every break logged** with its reason. > **Educational, not advice** > > This course explains how trading works; it never tells you what to buy or sell. Rules limit the damage; they don't make trading profitable. Most people who trade lose money, and you can lose all of it. For taxes and rules, check with a licensed professional where you live. - Previous lesson: [A losing streak is normal](https://productovi.com/courses/trading/losing-streaks-are-normal.md) - Next lesson: [Case: decide whether and how to start](https://productovi.com/courses/trading/should-i-start.md) --- Productovi Learning. Free, no sign-up needed to read.