Parachute Rules

The term is meant to provide a visual picture of "stopping the fall" once a trader experiences a pre-defined number of losses.

These rules form part of a trader's overall Trading Plan, with the intention behind these rules to be to limit losses so as to protect your underlying trading capital.

Parachute Rules will be different for every trader, but many will start with the rule that if 2 consecutive losses are incurred, the trader will step away from the computer and spend a pre-defined period of time away from trading.