Risk Management
Position sizing, stop-losses, and circuit breakers protect your capital in every execution mode. These controls are fully active in backtesting and paper trading today, and will carry over to live trading when it launches post-beta.
BETA Notice: Risk management controls are fully functional in backtesting and paper trading during the beta period. When live trading launches post-beta, these same controls will protect real capital. Configure and validate them now so you are ready.
Why Risk Management Matters
No strategy survives without proper risk management. Even profitable strategies can destroy accounts if position sizing and drawdown limits are ignored.
Preserve Capital
Limit losses on any single trade to a small percentage of your account (recommended 1-2%)
Survive Drawdowns
Automated circuit breakers pause trading before losses become catastrophic
Stay Consistent
Systematic risk rules remove emotion from position sizing — the same rules apply in backtest, paper, and live
Three Layers of Protection
Control how much capital goes into each trade. Vantixs supports four methods:
- Fixed Size: Trade a constant amount per position (e.g., 0.01 BTC per trade). Simple but doesn't adapt to account growth or volatility.
- Risk Percentage: Risk a fixed percentage of account equity per trade (e.g., 1-2%). Position size automatically adjusts based on stop-loss distance — tighter stop = larger position, wider stop = smaller position.
- Account Percentage: Allocate a percentage of total equity per position (e.g., 10%). Simpler than risk percentage but doesn't account for stop-loss distance.
- Kelly Criterion: Mathematically optimal sizing based on your strategy's historical win rate and average reward/risk ratio. Maximizes long-term growth but can be aggressive — many traders use "half Kelly" for safety.
Recommended approach: Risk 1-2% of account per trade using the Risk Percentage method. This ensures you can withstand 10+ consecutive losses without significant drawdown.
Configuring Risk in Vantixs
Set Up Risk Management
Add Smart Exit Node
From the Execution category, drag a Smart Exit node onto the canvas and connect it to your signal chain. Configure stop-loss type (fixed, ATR-based, or trailing) and take-profit levels.
Set Position Sizing
In the Signal to Order node, choose your sizing method: - **Fixed**: Set a constant trade size - **Risk Percentage**: Set 1-2% risk per trade (recommended) - **Account Percentage**: Set allocation per position - **Kelly Criterion**: Uses your strategy's win rate and R:R ratio
Configure Circuit Breakers
Go to Settings → Risk Management and set: - **Max Drawdown**: 10-20% (recommended: 15%) - **Daily Loss Limit**: 3-5% (recommended: 3%) - **Max Open Positions**: 3-10 (depends on strategy) - **Cooldown Period**: 5+ minutes
Validate in Backtest
Run a backtest to verify that stops trigger at correct levels, position sizes are calculated correctly, and circuit breakers halt trading at the configured thresholds.
Test with Paper Trading
Run paper trading for at least 1-2 weeks. Monitor that risk controls behave identically to backtest results under live market conditions.
Risk Parameters Reference
| Parameter | Description | Suggested Range |
|---|---|---|
| Risk per Trade | % of account equity risked per position | 0.5% - 2% |
| Max Drawdown | Account-level circuit breaker threshold | 10% - 20% |
| Daily Loss Limit | Maximum loss allowed per calendar day | 3% - 5% |
| Max Open Positions | Concurrent position limit | 3 - 10 |
| Stop-Loss Distance | Price distance from entry | 1% - 5% (or 1-3x ATR) |
| Take-Profit Target | Reward relative to risk per trade | 1.5:1 - 3:1 |
| Trailing Stop Callback | Distance trailing stop follows behind price | 1% - 3% |
| Cooldown Period | Pause duration after circuit breaker triggers | 5 - 30 minutes |
Common Mistakes
No Stop-Loss
Trading without a defined exit point. Every trade should have a stop-loss configured before entry — the Smart Exit node enforces this.
Over-Leveraging
Using too large position sizes. Keep risk per trade below 2% of account equity. Even with a 50% win rate, 10 consecutive losses at 2% risk only draws down ~18%.
Moving Stops
Widening your stop-loss when price approaches it. Set it and respect it — the Smart Exit node executes stops automatically without intervention.
Ignoring Correlation
Opening multiple positions in highly correlated assets (e.g., BTC and ETH). Use the max open positions limit and diversify across uncorrelated markets.
The best risk management is boring. Consistent 1-2% risk per trade, disciplined stops, and a circuit breaker at 15% drawdown will keep you in the game long enough to find your edge. Validate everything in backtest and paper trading before going live post-beta.