Do you have a set level of your daily P&L that you are willing to give back while you continue to trade the rest of the day? Sort of like a trailing stop for your daily P&L so you dont give back too much profit. I am not saying to look at your P&L all day but when you do check it throughout the day how are you determining when you have given back too much profit? I know there are differences of opinions in regards to whether or not to set daily P&L goals but if you are a $500/day (for example)trader it seems silly to give back more than $100 (25%) of this if you have met your goal already.
For me it depends how I lose it. This is only because I have almost two years of experience; for beginners a set number might be better, but with me it depends how I lose the money. If I'm doing the right thing, and my strategy still works, but an exogenous event causes me to lose money and I FULLY accept that loss (I know myself well enough... I didn't always, but now I do, to know when I will accept a loss vs. channel anger inwardly). If the loss was from being in an undisciplined trade, I can give back 10% of my day and sometimes I'll stop for that... but if it's 70% on one trade, where I wasn't holding it against me but I the slippage got me far more than I anticipated, I won't stop just because it's a number. Basically, it depends how I lose the money, and how I react to losing money. If I lose the money gambling and and angry at myself and gave back half my day I will stop. If I lost the money trading my system and I gave back 80% of the day and I'm a little disgruntled with the situation but not feeling any urges to gamble and not feeling an increase in anxiety or a desperate desire to get the money back, I will sit back, relax, and wait for the next setup.
An example of my earlier point... today at one point I was up $900 and went down to $450, so half my day, but that was because I Had 2 straight losses on high probability setups where risking $200+ was worth it. I was slightly slightly annoyed, since I hate being almost up 4 digits then going below $500, anything 4 digits I'm happy with, but I kept on trading my strategy. 4 hours later all was going well and I was happily sitting up $1850, and I took a planned $120 loser. However, after that, in the same stock, I took an immediate $100 loss that was NOT party of my strategy. Then, I went to another stock, and took a setup that was mediocre at best - it didn't have all the criteria for being great - and lost on it, THEN I went to go the other way (a big no-no on that setup), and not only did I go the other way (flip the long from short) but I entered the short with a market order at an ass price. Then my p/l showed about $1470, which for me was the sign to shut it off. I had had a bigger drawdown earlier in the day, when I was up less, but it was responsible to keep trading; for me to keep trading this afternoon after those losses would have been undisciplined and potentially a recipe for disaster. This mentality makes sure that no more than once a month am I up a nice amount of money ($800+) early in the day with a red finish.
This post assumes daytraders are profitable. Most aren't. So the question would be: What % of your losses are you going to risk losing again?
You should never trade your P&L. This is a rookie mistake. You should trade the equity/option based on buyer seller moving average chart pattern and so on. Your main focus should be on the trade your risk management should be based on the setup. If you are making poor trades you should re-focus or stop trading for the day. So to answer your question 3 bad trades in a row you could take a break or stop for the day. The most challenging in this game is to separate yourself from the money but when this happens you will maximize your potential. I have my pl covered for years and i just trade. Just play the game and I THINK can be a very expensive thing to do.