A max drawdown rule only works if you will obey it on a bad Thursday — not only on a spreadsheet.
Pick a number tied to life
Account for rent, stress, and time to rebuild. A 40% hole that “math says is recoverable” may still destroy decision quality. Choose a limit you can emotionally survive.
Daily and weekly brakes
Intraday loss caps stop revenge spirals. Weekly caps stop death-by-a-thousand-cuts. Automate what you can: alerts, platform limits, or a written stop-trading rule.
What happens after the limit
Pre-commit: flat for the day, size cut for a week, or full review. Deciding after the limit is when ego bargains.
Strategy vs. account drawdown
A system can be within historical drawdown while your personal tolerance is breached. Honour the tighter constraint.