01
1. The three layers of risk
| Layer | Question | Example |
|---|---|---|
| Trade | How much do I lose if I am wrong? | $120 per trade |
| Day | How much do I lose before I stop? | $300 daily cap |
| Account | What happens if the red day repeats? | Lockout and forced pause |
Most traders mix those three layers and end up oversizing. A trade can be acceptable, but two or three in a row might not be. The day layer prevents a losing streak from turning into a deeper hole.
02
2. A simple framework that actually gets used
- Per-trade risk: 0.25% to 0.5% of the account, or a very small fixed amount.
- Daily risk: 1R to 2R maximum before you stop.
- Weekly risk: a number that forces a reset if your process breaks down.
- Account risk: automatic lockout and flatten rules when the plan is broken.
If you trade a prop firm, the account layer matters more because the firm already imposes limits. Your job is to place your own control slightly before those limits, not right on top of them.
03
3. Real examples by account size
| Account | Risk per trade | Daily cap | Note |
|---|---|---|---|
| $5k | $50 | $100 | Micros only |
| $25k | $125 | $250 | One mistake cannot be heroic |
| $50k | $150 | $300 | The red day must end quickly |
| $100k | $250 | $500 | More capital does not mean more freedom |
Do not increase risk because your last trade was green. Increase risk when your process justifies it, not when your emotions ask for it.
04
4. Automation that actually helps
- 1Lockout when the daily cap is reached.
- 2Auto-flatten when a high-impact news event is near.
- 3Contract cap to avoid size-up on tilt.
- 4Alerts when remaining room drops under the safety buffer.
05
5. Common mistakes
- Confusing discipline with sitting through one more loss.
- Placing an arbitrary stop unrelated to volatility.
- Defining a daily cap and never automating it.
- Using a larger account only to feel more freedom.