Loss limit – parameter you MUST watch when trading with Fintokei
Want to complete the Fintokei challenge and receive regular payouts? Then you need to know how a loss limit works.
Want to complete the Fintokei challenge and receive regular payouts? Then you need to know how a daily or maximum loss limit works.
Whether you decide to tackle the markets with ProTrader, or trade from day one with our virtual capital on SwiftTrader, keeping an eye on your losses is crucial. At Fintokei, we focus on loss limits as the primary metric for monitoring traders. Exceeding this limit is considered a hard breach of our rules and leads to failure of the trading challenge or termination of your trading account.
Each of our programs has its own method for calculating the acceptable level of loss, or loss limit, on your account. Let’s dive deeper into how these calculations vary depending on the program you choose, ensuring you’re fully prepared to trade within safe boundaries.
Understanding the two types of loss limits
At Fintokei, we’re dedicated to identifying real trading talent and guiding them towards a professional career. A key trait of a skilled trader is their ability to manage risk and minimize losses, making the loss limit the most critical metric we track. We monitor it in two distinct ways:
- daily loss limit, which is specific to our ProTrader program,
- and maximum loss limit which is relevant to all our trading programs.
Let’s start by examining the daily loss limit.
What is a daily loss limit and how is it calculated
A daily loss limit is the maximum loss allowed on your trading account within a single day. If this limit is exceeded, we consider it a hard breach of our rules, leading to the termination of your trading account/challenge. This metric is specifically calculated for participants in our ProTrader program.
How is the daily loss limit calculated?
Each day, precisely at midnight server time, our systems assess your account’s equity—the total value of your trading capital. From this, we establish the maximum tolerable daily loss limit, which is the threshold you should not breach the following day. For ProTrader participants, this daily loss limit is set at -5%. Understanding and adhering to this limit is crucial for managing risks and maintaining the integrity of your trading strategy.
| Program | Daily loss limit |
|---|---|
| ProTrader | – 5 % |
| SwiftTrader | – 3 % |
| StartTrader | – 3 % |
Example:
Imagine you start trading with an initial capital of 100,000 EUR. After a successful first day, you manage to increase your equity to 103,000 EUR. At midnight (server time), our system automatically recalculates your daily loss limit limit based on your new equity. The new limit is set at 97,850 EUR, which is calculated as 103,000 EUR minus 5% (103,000 * 0.05).
Feeling confident, you dive into the next trading day sending multiple trades into the market. However, it turns out your confidence might have been a bit misplaced as the trades don’t pan out as expected. Luckily, you recognize the need to stop after a few unsuccessful attempts, and you finish the second trading day with a 2,000 EUR loss, leaving your total equity at 101,000 EUR. Despite the losses, you haven’t breached your daily loss limit of 97,850 EUR, so you can proceed with trading as usual the following day.
For the third day, your daily loss limit will be recalculated based on your new equity. Now, you must ensure that your account balance does not fall below 95,950 EUR, which is 101,000 EUR minus 5% (101,000 * 0.05).
As demonstrated, the daily loss limit is dynamic; it adjusts with changes in your account balance, providing you with more leeway to manage losses as your equity increases.
Don’t forget that you have to keep your loss limit in check even after completing the ProTrader challenge!
What is a maximum loss limit and how is it calculated
Maximum loss limit is an all-encompassing metric that applies to all Fintokei programs. It is calculated from your initial available capital in your account right from the start in the case of SwiftTrader, or after completing the evaluation in the case of ProTrader. For ProTrader, the maximum loss limit is set at -10%.
| Program | Maximum loss limit |
|---|---|
| ProTrader | – 10 % (static) |
| SwiftTrader | – 6 % (static) |
| StartTrader | – 6 % (static) |
Good news! All Loss limits are tracked automatically in your MyFintokei zone!
While it’s wise to keep an eye on your daily loss limit and maximum loss limit manually noting these figures on a piece of paper and sticking it to your monitor can be helpful, but you’ll find it much easier to monitor these metrics directly in your MyFintokei zone. This feature automatically keeps track of all these important values for you. Access to MyFintokei is granted as soon as you enroll in one of our programs, including the free trial versions. This tool not only simplifies your trading management but also helps ensure you stay within your trading parameters efficiently and effectively.
Conclusion
At Fintokei, we are dedicated to unlocking the true trading potential of our clients and demonstrating that with the correct information and disciplined trading habits, impressive results are within reach. However, successful trading extends far beyond haphazardly executing trades and hoping for the best.
The difference between aspiring professionals and reckless “shooters” lies in a meticulous and rational approach. Trading sensibly, adhering to a well-thought-out plan, and most importantly, practicing stellar risk management set the foundation for success. This is precisely why the loss limit metric, as explained in this article, is pivotal in all our programs. It’s not just about making trades; it’s about making smart decisions that safeguard your investments and maximize your trading potential.
