Zerodha ‘Kill Switch’: Making loss? Take a break, disable trading. How to use this new Kite feature

Zerodha, India’s largest brokerage firm, has come up with a new feature ‘Kill Switch’, a new nudge on its Kite app. This will allow users to take a break from trading and prevent over-trading. With its Nudge functionality, Zerodha has been including warnings and nudges into Kite, alerts that help clients better the odds of winning when trading. “When you’re in a drawdown while trading, the best thing to do is to take a break. Otherwise, the chances of you being irrational, taking large bets, overtrading & blowing up are high,” said Nithin Kamath, Founder & CEO, Zerodha Online, in a tweet.

Kamath, in a post published on the Zerodha website, said when in a drawdown or making losses, the average number of trades are significantly higher than when making profits. Good traders either reduce their trading size significantly or take a break from trading when in a drawdown. This is maybe the only way to survive trading the markets in the long run. Being aggressive or trading more when losing rarely ever works out well, he said. “If you’re making losses, this new feature helps with your trading discipline and risk management by allowing you to instantly disable trading in one or more segments on Kite, forcing you to take a break from trading,” read part of the post.

Trading in a segment can be re-enabled only 12 hours after the segment is disabled. Currently, this function is manual, but the company is working on setting up the Kill Switch to be triggered automatically, based on a predefined loss or drawdown level fixed by a user. Apart from this, Zerodha is also working to allow users to define the maximum order and position sizes for every instrument as a percentage of the overall trading capital. “This is to help you avoid taking large positions due to anxiety induced by greed or fear when trading,” Kamath said.

How to use Kill Switch feature

The Kill Switch feature will also help users looking to temporarily deactivate the trading account or specific segments for any reason. The users of Zerodha will have to exit all open positions and cancel all open orders before disabling a segment. Traders can use Kill Switch and deactivate trading by visiting Console, then going to accounts section. In the last step, go to the segments tab and deactivate. While talking about this feature, Kamath in a tweet said: “I think taking a break when things aren’t going well can be super helpful in all aspects of life”.