Risk Management
Protect your capital with position sizing, stop-losses, and circuit breakers. Risk management is what separates profitable traders from those who blow up their accounts.
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
Survive Drawdowns
Set maximum drawdown thresholds that pause trading before catastrophic losses
Stay Consistent
Systematic risk rules remove emotion from position sizing decisions
Three Layers of Protection
Control how much capital goes into each trade:
- Fixed Size: Trade a constant amount (e.g., 0.01 BTC per trade)
- Risk Percentage: Risk a fixed percentage of account per trade (e.g., 1-2%). Position size adjusts based on stop-loss distance.
- Account Percentage: Allocate a percentage of total equity per position (e.g., 10%)
- Kelly Criterion: Mathematically optimal sizing based on win rate and reward/risk ratio
Recommended approach: Risk 1-2% of account per trade. This ensures you can withstand a string of losses without significant drawdown.
Configuring Risk in Vantixs
Set Up Risk Management
Add Smart Exit Node
From Execution, drag a Smart Exit node and connect it to your signal chain. Configure stop-loss and take-profit levels.
Set Position Sizing
In the Signal to Order node, choose your position sizing method (fixed, risk_percentage, or account_percentage) and set the value.
Configure Risk Settings
Go to Settings → Risk Management. Set your max drawdown limit, daily loss limit, and maximum open positions.
Enable Circuit Breakers
Toggle the circuit breaker on. Set the drawdown threshold that will halt all active strategies.
Test with Paper Trading
Run paper trading for at least 1-2 weeks. Verify that stops trigger correctly and position sizes are calculated as expected.
Risk Parameters Reference
| Parameter | Description | Suggested Range |
|---|---|---|
| Risk per Trade | % of account risked on each position | 0.5% - 2% |
| Max Drawdown | Account-level halt threshold | 10% - 20% |
| Daily Loss Limit | Maximum loss allowed per 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 | 1.5:1 - 3:1 |
Common Mistakes
No Stop-Loss
Trading without a defined exit point. Every trade should have a stop-loss before entry.
Over-Leveraging
Using too large position sizes. Keep risk per trade below 2% of account.
Moving Stops
Widening your stop-loss when price approaches it. Set it and respect it.
Ignoring Correlation
Opening multiple positions in correlated assets. 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.