Daily limits catch blow-ups; weekly limits catch attrition. Four consecutive days at minus 1.2% each never trips a 3% daily rule but is a 4.8% week, and it usually signals a regime the strategy does not trade well rather than bad luck.
A common structure nests the tiers: daily 3%, weekly 6%, monthly 10%. Hitting a tier does not mean stopping forever - it means stopping now, reviewing, and restarting at reduced size under a reduced-size-restart rule.
The diagnostic value is the real payoff. A week that hits the limit deserves a specific question: were the losses from the planned setups executed properly, or from improvised trades? Those are different problems with different fixes, and only one of them is about the market.
Related: daily-loss-limit, monthly-loss-limit, drawdown-throttle, reduced-size-restart