It's tempting to put your whole account to work — idle cash feels like wasted opportunity. But trading with every dollar deployed leaves no room for error, no reserve for opportunity, and no psychological cushion. The cash-buffer rule — always keeping a meaningful portion in cash — is a simple discipline that quietly makes everything else work better.
Three reasons to hold cash
Margin for error: a buffer absorbs a bad day or an unexpected loss without forcing you to the brink — it's the practical face of the recovery math. Dry powder: cash lets you act on a genuinely great setup or add on confirmation without being fully committed — being all-in means you can't take the best opportunity when it comes. Psychological safety: a fully-deployed account makes every wiggle feel existential, which degrades your decisions; a buffer lets you trade calmly, and calm trading is better trading.
How much to hold
There's no magic number, but the principle is that a real portion of the account stays uncommitted — many scalpers keep the large majority in cash and only ever have a small fraction at risk across live positions at once (which also caps correlated exposure). For a 0DTE trader this is natural: you're in cash most of the time anyway, deploying briefly per trade. The rule is to keep it that way deliberately rather than drifting toward fully invested.
Cash isn't idle — it's optionality, insurance, and calm. The trader with dry powder can survive the bad day and seize the great setup; the fully-deployed one can do neither.
A bonus in a 0DTE context
Because 0DTE traders sit in cash the majority of the time, that cash isn't dead weight — in a positive-rate environment it can earn short-term interest, a small, riskless return on the buffer you're holding for risk reasons anyway. The cash buffer pairs with your layered risk limits as the foundation of an account that's built to last rather than optimized to be fully at risk.