Trading Agents

Risk Management

Set the rules your agent can't break

Risk management is how you protect your account. You define the boundaries — how much to risk per trade, how much profit to target, how much loss you can tolerate — and your agent follows them on every single trade. No exceptions, no emotions.

Why This Matters

The best strategy in the world won't save you if your risk management is bad. One oversized trade can wipe out weeks of gains. One missed stop loss can spiral into a disaster.

Human traders struggle with this. They move stops, double down on losers, and let emotions override their plan. Your agent doesn't do any of that. It follows the risk rules you set, every time, exactly as written. That consistency is one of the biggest advantages of using an agent.

The Four Risk Settings

When you create or configure an agent, you set four risk parameters. Here's what each one does and why it matters.

Max Risk Per Trade

This is the most you're willing to lose on a single trade, expressed as a percentage of your account.

  • 0.5% — Ultra conservative. Tiny positions, very slow account growth, but nearly impossible to blow up.
  • 1% — The standard for most professional traders. Lose 10 trades in a row and you're only down 10%.
  • 2% — Moderate. Allows larger positions and faster growth, but drawdowns add up quicker.
  • 3% — Aggressive. You're accepting bigger swings for the chance at bigger returns.
  • 5% — Very aggressive. A losing streak will hurt. Only for strategies with high win rates.

When your agent places a trade, it automatically sizes the position so that if the trade hits its stop loss, the most it can lose is this percentage of your account. You don't need to calculate position sizes — the agent handles it.

Risk/Reward Ratio

This is the minimum profit target relative to what you're risking. It answers: "For every dollar I risk, how much do I need to make?"

  • 1:1.5 — Risk $1 to make $1.50. Needs a higher win rate to be profitable.
  • 1:2 — Risk $1 to make $2. The sweet spot for most strategies. You can be wrong half the time and still make money.
  • 1:3 — Risk $1 to make $3. Bigger winners, but you'll have more losing trades.
  • 1:4 — Risk $1 to make $4. Swing trading territory. Fewer wins, but they're big.

Your agent uses this to set its take-profit level. If it risks $100 on a trade with a 1:2 ratio, it targets $200 in profit.

Max Drawdown

This is the maximum total loss your agent will tolerate before it stops trading. Think of it as an emergency brake.

  • 5% — Very tight. The agent stops early if it's having a bad streak. Protects capital but may stop trading during normal volatility.
  • 10% — Conservative. Standard risk management. Gives the agent room to recover from a few losses.
  • 15% — Moderate. More breathing room for strategies that have natural ups and downs.
  • 20% — Aggressive. You're comfortable riding out bigger drawdowns.
  • 25% — High tolerance. Only for strategies you deeply trust with proven track records.

If your account drops by this percentage from its peak, the agent pauses itself. This prevents a bad strategy or unusual market from draining your account.

Position Sizing Method

This controls how the agent calculates trade sizes.

  • Percent of Portfolio — Sizes each trade as a percentage of your current balance. As your account grows, positions grow too. As it shrinks, positions shrink. This is the most common method.
  • Fixed Size — Same dollar amount every trade, regardless of account size.
  • Volatility Adjusted — Smaller positions in volatile markets, larger in calm ones. Adapts to conditions automatically.
  • Kelly Criterion — A mathematical formula that sizes trades based on your edge (win rate and average win/loss). Optimizes growth but can be aggressive.

Not sure what to pick? Start with 1-2% risk per trade, 1:2 risk/reward, 10-15% max drawdown, and percent-based sizing. This is a solid baseline that works for most strategies. You can fine-tune later once you see how your agent performs.

How the Agent Uses Your Risk Settings

When your agent decides to take a trade, here's what happens behind the scenes:

  1. It reads your max risk per trade — Say it's 2% and your account is $100,000. The most it can lose on this trade is $2,000.
  2. It calculates position size — Based on where the stop loss is, it figures out the right number of shares/contracts so that hitting the stop = $2,000 loss.
  3. It sets the take profit — Using your risk/reward ratio, it places a target. At 1:2, that's $4,000 profit.
  4. It places the trade — Entry, stop loss, and take profit all go in as a bracket order.
  5. It checks the drawdown — If this trade would push the account past the max drawdown limit, it skips the trade entirely.

All of this happens automatically, every trade, without you doing anything.

You write it down, the agent follows it. These aren't suggestions — they're hard rules. Your agent will never risk more than you've allowed, never skip a stop loss, and never ignore the drawdown limit. That's the whole point.

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