Playbook 03 · Slide 09 of 10 · Risk Management · The Kill Switch · When to Stop Trading

Kill Switch & Discipline

The kill switch is the most important rule in your trading plan. It's the line you never cross — the point where you stop trading, no matter what.

Max Daily Loss

-2R

Stop trading

Max Consecutive

3 losses

Walk away

Emotional Check

Every trade

Before entry

Daily Target

+3R

Consider stopping

The Kill Switch Rules

Daily loss limit: If you lose 2R in a single session, stop trading. Close all positions. Walk away.

Consecutive losses: If you take 3 losing trades in a row, stop. Even if you haven't hit 2R.

Revenge trading: If you feel the urge to "make it back," you're done for the day. This is not negotiable.

Rule breaking: If you break any rule in this playbook, stop trading. Log the violation. Review it tomorrow.

News events: No new positions 15 minutes before or after high-impact news (FOMC, NFP, CPI).

Discipline Framework

Pre-session checklist: EMA bias, bracket set, VWAP location, day type confirmed. All four before first trade.

Pre-trade checklist: Is this a valid setup? Does EMA align? Is the day type right? Is risk defined?

Post-trade log: Every trade gets logged — entry reason, exit reason, emotions, what you'd do differently.

Weekly review: Every Sunday, review all trades. Look for patterns in wins and losses. Adjust rules if needed.

Daily target reached: If you hit +3R, consider stopping. Greed after a good day destroys more accounts than losses.

⚠ The hardest trade is the one you don't take. Every professional trader will tell you: the difference between profitability and ruin isn't the winners — it's knowing when to stop. The kill switch exists to protect you from yourself. On the days you most want to keep trading are the days you most need to stop.

Emotional State Check — Before Every Trade

Green Light — Trade

Calm and focused

Following the plan exactly

Risk is pre-defined

No urge to "make back" losses

Red Light — Stop

Frustrated or angry

Deviating from the plan

Increase size to recover

Trading to feel something