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Risk Management Guide

Why Risk Management Matters

Even the best strategy loses trades. What separates profitable traders is not winning every trade — it's managing the losses so they don't destroy the account.

BRIX implements professional-grade risk controls used by prop trading firms.

The Three Safety Layers

Layer 1 — Per-Trade Risk

Every trade risks a fixed percentage of your account:

Formula: Risk Amount = Balance × Risk %

Position: Risk Amount ÷ SL Distance

Example with $1,000 account at 1% risk:

Risk Amount: $10

SL Distance: 0.21%

Position Value: $10 ÷ 0.0021 = $4,762 (using leverage)

Layer 2 — Daily Loss Limit

If the bot loses more than X% in one day, it stops taking new trades. This prevents a “bad day” from becoming catastrophic.

Conservative2%
Recommended3%
Maximum5%

Resets automatically at midnight UTC. Open trades continue until SL/TP hit.

Layer 3 — Max Drawdown

If the account falls by X% from its highest point, the bot stops completely. This is the ultimate circuit breaker. Requires manual restart.

Conservative5%
Recommended8%
Maximum15%

Understanding R:R Ratio

R:R (Risk:Reward) means: for every $1 you risk, how much do you make when you win?

BRIX default: 1:2 R:R

Lose: -$10 | Win: +$20

With 2:1 R:R, you can be profitable even with a 40% win rate:

10 trades, 4 wins, 6 losses:

Wins: 4 × $20 = +$80

Losses: 6 × $10 = -$60

Net: +$20 profit

Confluence Risk Scaling

Higher conviction = larger position size. This allocates risk intelligently:

Low conviction (1 engine): Small size — uncertain setup, small loss if wrong

High conviction (4 engines): Large size — very strong setup, significant profit if right, still within daily limits if wrong

Testnet First — Always

Before using real money:

  1. Run on testnet for 7+ days
  2. Check win rate (target: 55%+)
  3. Check profit factor (target: 1.3+)
  4. Check max drawdown (target: <5%)
  5. Only if all pass — consider real funds
  6. Start with the smallest amount you're comfortable losing entirely
  7. Scale up gradually as you build confidence