Risk Management Architecture

Every position enters with defined risk. Every loss has a floor.

Position Sizing

Each signal receives a fixed capital allocation. Sizing is deterministic — no discretionary overrides.

Factor	Value	Description
Starting notional per position	$50	Capital allocated per signal at launch
Leverage	2× (base)	See leverage ladder below; starts at 2× and earns up
Max positions open	15–20	Hard cap; new signals queue until a slot frees
Daily loss limit	2.5%	Percentage of account equity; triggers auto-halt
Max notional compounding	150%	Cap on how far per-position notional can grow via compounding

Leverage Ladder

Higher leverage is a privilege, not a default. Strategies must demonstrate consistent performance before leverage increases. Every tier has a smaller stop-loss, so dollar risk stays controlled even as notional grows.

Level	Min Days	Win Rate Required	Max Drawdown Limit	Stop-Loss %
2×	0	—	—	25%
3×	30	58%	8%	1.8%
5×	60	62%	6%	1.0%
10×	90	65%	4%	0.8%

Promotions require manual review. Demotions are automatic and immediate — any breach of drawdown or win-rate thresholds drops the strategy to the tier below without delay.

Stop-Loss Architecture

All stops are placed as native Bybit orders — not managed in software

Why native stops?

Broker fills the stop even if our software goes offline
No slippage from software-side latency or event loops
Exchange-guaranteed execution at the specified price level
Immune to network outages, VPS restarts, or process crashes

Current configuration

Stop-loss: -25% from entry price
Wide to avoid noise-driven exits on volatile crypto
Primary protection comes from entry gates, not the stop
Tighter stops at higher leverage tiers (see ladder)

Design rationale: A wide stop combined with strict entry gates is statistically superior to a tight stop with loose entry criteria. The gates filter out low-quality setups before they can reach the stop level. The stop is the last line of defence, not the first.

Daily Loss Limit

If realized P&L for the day hits -2.5% of account equity, trading halts automatically.

Trigger

-2.5%

of account equity realized in one day

Bot State

Paused

No new entries; existing positions managed normally

Reset

Midnight UTC

Limit resets automatically; no manual intervention needed

During a halt, open positions remain active and follow their normal exit rules (native stop-loss, max-hold timer, skip-close logic). The halt only prevents new position entries. This limits the compounding of a bad day without forcing premature exits.

Gate Stack as Risk Control

Our primary risk control is not the stop-loss. It's not entering bad trades.

Each gate independently filters a specific failure mode. All gates must pass before a position opens. Research shows these gates are orthogonal — they catch different bad environments — which means the combined filter is strictly better than any single gate.

Gate	What It Blocks	Why It Matters
Dispersion Gate	Low-signal-quality periods	When all assets move together, cross-sectional ranking has no edge. We wait for genuine divergence.
Alt-BTC Spread	BTC dominance shifts	Altcoins systematically underperform when BTC is outperforming the market by a wide margin.
Blow-Off Gate	Overextended entries	Late entries into parabolic moves carry poor risk/reward. The best gains are already priced in.
BTC Direction Gate	Correlated crash risk	A -2% BTC 24h move signals downside momentum that drags all altcoins. Based on Daniel & Moskowitz (2016).
Regime Gate	Wrong market environment	Win rates collapse in defensive and risk_off regimes. No new longs are opened when the market is in crisis.

Gates only block new entries. Once a position is open, exits are handled by the native stop-loss, max-hold timer, skip-close logic, and emergency flatten — none of which are affected by entry gates.

Drawdown Management

Observed Max DD

8–12%

Per-strategy across live testing; varies by lookback period

Diversification

Multi-LB

Strategies use 5d, 14d, and 21d lookbacks — drawdowns are not correlated

Emergency Flatten

Market Orders

fleet_emergency.py closes all positions immediately via market orders

Cross-Strategy Drawdown Isolation

Each strategy runs on its own isolated subaccount with separate capital. A drawdown on the 14-day momentum strategy does not affect the capital available to the 5-day or 21-day strategies. This prevents a single bad period from dragging the entire portfolio.

Daily P&L reports are generated at 07:00 UTC and cross-checked against Bybit's closed-PnL API to ensure accuracy. All reported figures are exchange-verified, not estimated.

What We Don't Do

Risk management is as much about discipline as systems. These are hard constraints, not guidelines.

No Martingaling

We never add to losing positions. Position size is fixed at entry. Doubling down on losers turns manageable losses into account-ending losses.

No Uncapped Leverage

Maximum leverage is hard-coded at 10×. The lever is only available after 90 days of validated performance. There is no mechanism to override the cap.

No Risk-Off Trading

Zero new positions are opened when the regime is risk_off. Historical data shows win rates collapse in these conditions. Capital preservation beats chasing.

Risk parameters are reviewed continuously and updated as strategies mature. Current figures reflect live demo performance as of June 2026.