Software

A loss-limiting expert advisor for MT4 and MT5

An mt4 loss-limiting expert advisor is a class of tools rather than the name of a product, which is why no brand is named here. They all have one task: to close positions and forbid opening new ones once the daily limit is used up. This is the only tool in the section that works at the moment of the breakdown rather than after it.

Why a rule executed by a human is not executed

The daily limit is the cheapest restriction that exists and the hardest to carry out. The reason is not weak will: at the moment the limit is needed, the decision is being taken by your state.

01The limit is needed exactly when you do not want to keep it

After three stops in a row, the restriction looks like giving up the chance to win it back. The rule and your state always collide at the worst moment.

the mechanics of tilt

02Cancelling costs zero effort

Closing a reminder window takes one movement. Any restriction that is lifted faster than a trade is opened is not a restriction.

the price of the workaround

03Memory adjusts the story

The next day the breach is explained by the exceptional nature of the situation. Without an entry in the journal that version stays the only one.

why it is not visible

What an MT4 risk manager does: limiting the daily loss on forex

The set of actions in tools of this class is roughly the same. The difference between a «reminder» and a real limiter is in the third and fourth points.

Six functions of the class, sorted by the price of the workaround

Action	What happens	How hard it is to get round
Counts the daily result	Sums up closed trades and the floating loss since the start of the day	Nothing to get round — this is measurement
Warns on the approach	A message when part of the limit is reached	Easy: close the window
Closes open positions	Forced closing when the threshold is reached	Medium: switch the advisor off
Blocks new orders	Does not let you open a trade until the end of the trading day	Medium: remove it from the chart
Keeps a log of triggers	Writes the date and reason for the stop to a file	Hard: the record stays
Requires a password to switch off	Lifting the restriction is protected by a password	Hard, if the password has been given to another person

The limiter: short answers

Is it a program or a class: A class. There are many implementations, the mechanics are one.
Where it works: MT4 and MT5, less often a broker's own platform.
Does data leave the machine: No: the advisor works inside the terminal.
Does the broker stop you: No. A broker has no interest in trading stopping and usually offers no such function.
What to treat as the limit: The amount worked out on the daily limit page.
The main risk: A false sense of protection: the advisor closes trades but does not stop you opening another broker's terminal.

Particular implementations are not named: their make-up and quality change, whereas the mechanics of the class do not.

How to set it so that it cannot be switched off

A limiter you can switch off in ten seconds is useless on exactly the evening it was installed for. The point of setting it up is to raise the price of getting round it.

01Work the limit out in advance

The amount comes from a calculation, not from a feeling. On a calm evening it always looks too small — that is normal.

20 minutes

02Install it and test that it triggers

On a demo account, deliberately driving it to the threshold. An untested limiter is a hope, not a mechanism.

half an hour

03Give the password to another person

The most effective step and the most unpleasant. Getting round it stops being a technical action and becomes a conversation.

once

04Record every trigger

A line in the journal: the date, how far the loss went, what preceded it. After a quarter the pattern is visible.

continuously

What the limiter will not do

An honest list. The tool closes one scenario out of five, and knowing about the other four matters more than configuring this one.

does not stopOpening a second accountThe advisor lives on a particular terminal. A second account with another broker gets round it completely — and this is the most frequent workaround.

does not cureThe cause of the breakdownThe limiter stops an evening, not a habit. Examining the cause is left to the journal and the weekly review.

does not replacePosition size by calculationWith an inflated size, the daily limit is used up in a single trade. Position size first, then the limit.

doesStops the chainThe main thing and the only one: the chain «stop — revenge trading — doubling» is broken at the first link, while it is still cheap.

Four workarounds a trader invents

The limiter is at war not with the market but with the inventiveness of the account holder. All the workarounds are known in advance, and each has a counter-measure — usually not a technical one.

The workarounds are known in advance — so are the counter-measures

Workaround	How it looks	What helps
A second terminal	An account with another broker without the advisor	The only honest answer is to admit it in the journal and count such evenings separately
Remove the advisor from the chart	Ten seconds, if there is no password	The password held by another person, or by you but written down and taken out of quick reach
Raise the limit in advance	On the morning of a calm day the figure looks small	The limit is reviewed once a quarter from the statistics, not from your mood
Open a position before it triggers	A large size at the start of the day «while you still can»	A limit on trade size in addition to the daily limit

What an evening without a limiter costs

Let us count the chain the advisor is installed to break. A $10,000 account, planned risk 2 % ($200), the daily limit two risks, that is $400.

A multiplier of 2.0 after every loss — spontaneous revenge trading

Trade of the evening	Risk	Loss	With a limit	Without a limit
First	$200	−$200	we trade	we trade
Second	$200	−$200	limit used up, stop-day	we trade
Third, doubled	$400	−$400	—	we trade
Fourth, again	$800	−$800	—	we trade

The evening's total: $400 with a limiter against $1,600 without it, 4 % of the account against 16 %. The difference is not in discipline but in the fact that on the third trade the decision was taken by the advisor rather than by your state. You can work out your own chain with any multiplier in the revenge trading calculator.

Frequently asked questions

Where do I get a loss-limiting advisor?

There are many implementations: ones built into brokers' builds, paid and free ones in the MetaTrader catalogues, and home-made ones. We do not recommend a particular one: the quality changes, and an advisor that has the right to close your positions will have to be checked by you yourself in any case.

Is it not dangerous to give an advisor the right to close trades?

It is dangerous, and that has to be said plainly. Any advisor with trading rights can close a position at the wrong moment because of a bug. Testing on a demo before installing on a live account is no formality here.

What limit should I set?

The one worked out on the daily limit page: usually two or three trade risks. More, and the rule does not get a chance to work; less, and trading is stopped by a perfectly normal losing run.

And if the broker offers a stop of its own?

So much the better: a restriction on the broker's side is the hardest of all to get round. Such a function is rare, but it is worth asking about.

Will it help with gambling addiction?

No. It is a technical restriction on one terminal, not a treatment. The signs at which what you need is not an advisor are examined on the page on forex addiction.

How long does it take to get used to it?

Usually two or three triggers. After the third, an evening closed by the advisor stops feeling like an opportunity taken away and starts feeling like an amount saved.