First of all this tread is geared towards daytraders and not investors or swing traders. Now every trader knows that fear/greed is the enemy. Usually when having a losing position if you allow fear to possess you: you hold and hope to get even. You may even average down. Eventually you experience a loss so massive that you must capitulate to it. And if you have a winning position - you allow greed to possess you: you hold and hope for a monster win and don't take profits and watch it shrink dramatically or turn into a loss. Or if you average up then the first slight pullback stops you out. So this is where limiting losses and profits per day proves its value. Once you end lose X amount you call it a day and once you profit X amount you call it a day. This promotes a much more unemotional way of trading.