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The kill switch, cutting size, the job of cash, and when to come back
Published by The Retail Trader · AUG 09, 2026 · Features
Every trader hits a bad patch — the same system, the same effort, but opposite results. What is done in that patch matters more than the rest of the year. And those decisions cannot be made inside that patch; they have to be written beforehand.
Every system has its own bad patch. A backtest gives a rough estimate of it — the longest losing streak and the biggest drawdown.
When you already know that number, its arrival does not feel like a disaster, it feels like something expected. That one thing alone removes half the panic.
A simple framework with three levels:
• Daily — if the loss in a day exceeds the set limit, the screen goes off. Tomorrow is a new day.
• Weekly — if the limit set for the week is crossed, cut size in half, and trade only your best setup.
• Overall — if total drawdown reaches the set level, stop trading and review. Stopping is not defeat, it is a step.
Choose these numbers yourself, but choose them with a calm mind — and write them down. A rule that is not written down does not exist on a bad day.
In a bad patch the first reflex is to change the system. This is almost always wrong — you are abandoning a system at exactly the moment its results are at their worst, which is when its chance of coming back is highest.
The right order is the opposite: cut size first, then cut frequency, and touch the system only when the data says it has actually broken — not on your feelings.
In a bad patch the least used tool is cash. You do not have to be in the market all the time, and it is not a badge of shame.
Cash gives you two things — protection of capital and room in your head. The second is worth more than the first, because bad decisions often arrive when every rupee is stuck somewhere.
The decision to come back should not be made by P&L. It should be made by process: have you returned to your rules, do you know what went wrong, and can you follow your setup consistently on small size.
When the answer to all three is yes, build size back up slowly. A trader who comes back with the intention of 'winning it all back' starts the same cycle again — only this time with less capital.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time at the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.